Abstract

The purpose of this paper is to study the dynamics of Argentina provincial labor markets with a special focus on the way they react to shocks in the regional employment level. A comparison is made with the data on size and persistence of shocks in the United Stales and the European Community. After a brief review of theoretical and empirical data, the stationarity of employment, unemployment and labor supply series is analyzed and and the impulse-response functions of these are estimated from univariate models. A trivariate VAR is proposed to study the joint dynamics of these variables and regional labor markets adjustment mechanisms to employment demand shocks. The model allows to split the adjustment of the labor market among the movements of labor supply -through emigration or retirement from the labor force- and the adjustments in the levels of employment and unemployment.