Labour market adjustment in Jamaica

The central purpose of this thesis is to explore the dimensions of labour market adjustment in Jamaica. The paper adopts a microeconometric approach, relying on new and more detailed Jamaica Labour Force Survey data for the period 1983-2006. Over this period, Jamaica has experienced significant expansion in its external trade which has been characterized by a severe import bias. Also, during this time, Jamaica's agricultural and manufacturing sectors experienced declines in their respective employment shares of 44% and 36% while service sectors expanded. One chapter of the thesis explores the empirical link between expanding trade flows and manufacturing labour market adjustment. The thesis also explores whether and to what extent sectoral labour market adjustment in Jamaica has been accommodated by an accompanying occupational transformation. Central to analyzing the issue of occupational adjustment however, is the careful definition of what constitutes a skill in order to elucidate the role of skill specificity in labour market adjustment. The thesis then investigates the incidence of unemployment in Jamaica in an attempt to identify key factors leading to escape from unemployment within a low skilled, high-unemployment, developing country context. The study finds an important role for worker characteristics, trade and industry information in affecting labour market adjustment in Jamaica. Using occupational skill definitions due to Dolton and Kidd (1998), the study also finds that most of the occupational and sectoral mobility in Jamaica, over the review period, took place among unskilled manual workers. As such, the Jamaican employed labour force experienced very little skill upgrading over the 24 year period covered. The very limited up-skilling observed over the review period was due to the emergence of relatively more highly skilled, sales and distribution related occupations. As far as adjustment costs are concerned, across all mobility types, simple sectoral moves were- in general, relatively less costly; with occupational transformation playing an accommodative role to the sectoral adjustment. Industry information, educational qualifications, geographic location, gender and the degree of skill specificity and were all critical determinants of the type of adjustment observed in the Jamaican labour market. Finally, the thesis underlines the very high incidence of long-term unemployment among uneducated, unskilled, young males in Jamaica. The study reveals negative duration dependence in the Jamaican labour market and suggests a critical role to be played by worker training in affecting unemployment escape probabilities