A summary of the jobless recovery

In summary, the results indicate that indeed in past recessions there has been a recovery without formal employment. The lack of dynamism in formal employment was offset by an increase in unemployment, an increase in informal employment, and to a lesser extent by a fall in labor participation. There are several factors that appear to influence the low growth in formal employment when the economy is recovering.

On one hand, data indicates that companies suspend recruitment in the early periods of positive signs of the economy and, to meet the growing demand, workers increase the hours worked. We also found sufficient evidence that during labor market recessionary periods, important sectoral structural changes exist, which can be associated to unemployment; that is, during these periods, workers need to migrate from one industry to another, and the time it takes to find a new employment generates a jobless recovery.

Finally, we have evidence that labor productivity, measured as the product per hour worked in manufacturing and wages, increases in the subsequent periods to the valley of recessions.