Jobless recovery in Mexico

In a previous note we talked about the “jobless recovery” and its causes. In this note we will see another reason jobless recovery can present itself, this is the “job creation and job destruction”. When we talk about job creation we mean the number of people who began working from one period to another, and contrary the destruction refers to the number of people who stopped working from one period to another.

In the following graph we can observe the creation and destruction of formal employment for Mexico in the period 1999-2004. As shown, both creation and destruction are around 3% much of the time, but in the 2002 recession (shaded area) is clearly seen how job creation fall, increasing therefore the destruction, which means there was an unemployment rate higher in that period.