Abstract. The authors question the validity of Okunʼs law in Latin America in
this paper. Based on several econometric models, they show that fluctuations in
economic activity have a lesser impact on unemployment rates in Latin American
countries than in other, more advanced economies. Instead of stimulus policies focused
on reducing unemployment in general, these countries need targeted policies
that encourage job creation in specific sectors. That being said, the unemployment–
output ratio differs from one Latin American country to another. Where the ratio
is weak or non-existent, cyclical variations adversely affect the quality of employment
– another aspect that must also be addressed by economic policy.
