Tijuana's Dynamic Unemployment and Output Growth

Article Sidebar

PDF
Published: Jul 13, 2017
DOI: https://doi.org/10.17428/rfn.v15i29.1338
Keywords:
unit root output unemployment Tijuana Mexico

Main Article Content

Alejandro Díaz-Bautista
El Colegio de la Frontera Norte

Abstract

During the 1990s, Mexico successfully implemented a program of economic reforms and free trade aimed at a complete restructuring of its economy. Surprisingly, the reform process seems to have had little impact on unemployment. An analysis of trends indicates that, even in the worst years of economic crisis, average unemployment rates in Mexico did not exceed 7.4% (reached in the third quarter of 1995). Tijuana's unemployment rate averaged 0.725% in 2001, when the economy was experiencing the start of a recession and major structural reforms were expected. These figures seem very low when compared to those for other countries. This article's goal is to evaluate transitory demand shocks and permanent supply shocks in Tijuana's unemployment time series, as given by that identification restriction and the structural break unit root methodology. Okun's Law is also tested for the Tijuana unemployment series. RESUMENEn la década pasada, México estableció un programa de reformas económicas y de libre comercio encaminadas a la completa reestructuración de su economía. Sorprendentemente, el proceso de reforma tiene poco impacto en el desempleo. Un análisis de las tendencias indica que, aun en los peores trimestres de la crisis económica, la tasa de desempleo promedio no fue mayor de 7.4%. La tasa de desempleo trimestral de la ciudad de Tijuana en 2001 alcanzó en promedio 0.725%, en un período donde inició una recesión en la economía. Estas cifras son bajas al ser comparadas con las de otros países. El objetivo del estudio es evaluar los choques transitorios de la demanda y los permanentes de la oferta en el desempleo en Tijuana en diferentes períodos. Para ello utiliza la restricción de identificación y la metodología de raíz unitaria con corte estructural. La ley de Okun también es verificada para conocer la evolución del desempleo en Tijuana.

Article Details

How to Cite
Díaz-Bautista, A. (2017). Tijuana’s Dynamic Unemployment and Output Growth. Frontera Norte, 15(29), 125–150. https://doi.org/10.17428/rfn.v15i29.1338
Issue
Vol. 15 No. 29 (2003): enero-junio, 2003
Section
Papers

Authors publishing work in this journal agree to the following conditions:

  1. Authors retain copyright and assign first publication rights to the journal Frontera Norte (RFN), with the texts registered under an Attribution-NonCommercial-NoDerivatives 4.0 International Creative Commons license (CC BY-NC-ND 4.0), which allows third parties to use published material provided they give credit to the authors and acknowledge this journal as the first publisher.

  2. They authorize the reproduction, publication, translation, communication, and transmission of their paper and all accompanying material, publicly and in any form and by any means; its public distribution in as many copies as required; and public communication thereof in any form, including making it available to the public through electronic means or any other technology, and solely for dissemination and scientific, cultural, and non-commercial purposes.

  3. Authors may enter into further independent contractual agreements for the non-exclusive distribution of the version of the paper published in this journal (for instance, to include it in an institutional repository or personal webpage, or publish it in a book), provided it is not for commercial purposes and they clearly state that the work was first published in Frontera Norte (RFN) [and add the corresponding bibliographical record: Author/s (Year). Title of paper. Frontera Norte, volume (number), pp. doi: xxxx].

To that end, authors must submit the form assigning ownership of first publication rights, duly completed and signed. This document is to be uploaded in PDF format as a complementary file on the OJS platform.

Licencia de Creative Commons

This work is released under an Attribution-NonCommercial-NoDerivatives 4.0 International Creative Commons license (CC BY-NC-ND 4.0)..

References

Alana, G. L., and P. M. Robinson, 1997, “Testing of Unit Root and Other Nonstationary Hypothesis in Macroeconomic Time Series.” Journal of Econometrics 80:241-68.

Blanchard Olivier Jean, and D. Quah, 1989, “The Dynamic Effects of Aggregate Demand and Supply Disturbances.” The American Economic Review 79:655-73.

Blanchard, Olivier Jean, and Lawrence F. Katz, 1992, Regional Evolutions, Brookings Papers on Economic Activity 1/1992. Available at http://www.brook.edu/ dybdocroot/es/commentary/journals/bpea_macro/tocs.htm.

Campbell, John Y., and Pierre Perron, 1991, “Pitfalls and Opportunities: What Macroeconomists Should Know about Unit Roots.” NBER Macroeconomics Annual, Cambridge, Mass.: MIT Press.

Castillo, Ramón, and Alejandro Díaz-Bautista, 2003, “ Testing for Unit Roots: Mexico's GDP,” Working Paper, Department of Economic Studies, El Colegio de la Frontera Norte, forthcoming in review Momento económico.

Christiano, Lawrence J., 1992, “Searching for Breaks in GNP,” Journal of Business and Economic Statistics, 10:237-50.

Enders, Walter, 1995, Applied Econometric Time Series, New York: John Wiley & Sons. Enders, Walter, and B. S. Lee, 1997, “Accounting for Real and Nominal Exchange Rate Movements in the Post-Bretton Woods Period,” Journal of International Money and Finance, 16:233-54.

Fleck, Susan, and Constance Sorrentino, 1994, “Employment and Unemployment in Mexico's Labor Force,” Monthly Labor Review, 117 (11):3-31. Available at http://www.bls.gov/opub/mlr/1994/11/contents.htm.

Gamber, E. N., 1996, “Empirical Estimates of the Short-Run Aggregate Supply and Demand Curves for the Post-War U.S. Economy,” Southern Economic Journal, 62:856-72.

Gamber, E.N. and F.L®. Joutz, 1993, “An application of Estimating Structural Vector Autoregression Models with Long-run Restrictions,” Journal of Macroeconomics, 15:723-45.

Instituto Nacional de Estadística, Geografía e Informática, Statistics for vari ous years. Available at: www.inegi.gob.mx.

Nelson, C., and Plosser C., 1982, “Trends and Random Walks in Macroeconomics,” Journal of Monetary Economics, 10:139-62.

Perron, Pierre, 1989, “The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis,” Econometrica, 57:1361-1401.

Quandt, Richard E., and Rosen, Harvey S. 1988. The Conflict between Equilibrium and Disequilibrium Theories: The Case of the U.S. Labor Market. Kalamazoo, Michigan: The Upjohn Institute.

Revenga, Ana, and Riboud, Michelle, 1993, Unemployment in Mexico: Its Characteristics and Determinants, Report Number WPS1230, World Bank Policy Research Working Paper, Washington, D.C.

Song, F. M., and Y. Wu, 1997, “Hysteresis in Unemployment: Evidence from 48 U.S. States,” Economic Inquiry, 35:235-43.

Statistical Office of the European Communities (Eurostat), 2000. Available at http://europa.eu.int/comm/eurostat/Public/datashop/print-catalogue/ EN?catalogue=Eurostat.

U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics Website. Available at http://www.bls.gov/lauhome.htm.

U.S. Department of Labor, Bureau of Labor Statistics, 2001, How the Government Measures Unemployment. Updated Version of Report 864 (July). http://www.bls.gov/cps/cps_htgm.htm.