Cyclical and structural factors in the evolution of the unemployment rate

This article examines the cyclical and structural factors that affect trends in the unemployment rate in Metropolitan Lima from a historical and empirical perspective. The research focuses on the question of how external economic variables, such as inflation and population growth, impact fluctuations in the unemployment rate, which has shown an upward trend in recent years, outweighing 10% of the economically active population (EAP). Quarterly data from 1995 onward are used, and econometric models—including approaches related to the Phillips Curve and the NAIRU—are applied to identify the relationship between the unemployment rate and the factors analyzed. The results suggest that the weakness of cyclical factors—such as the relationship between inflation and unemployment—contrasts with the growing pressure from structural factors, particularly female labor force participation and population growth, which have contributed to the sustained rise in the unemployment rate. This implies that economic policies must focus on sustained growth and the creation of quality jobs to effectively address unemployment in the country. (Abstract and audio: Department of Economic Publications)