Defining Unemployment in Developing Countries: Evidence from Trinidad and Tobago

The International Labour Organisation (ILO) argues for relaxing the standard definition of unemployment in developing countries by eliminating the requirement that a person be actively searching for a job. We examine whether such an extension of the standard definition is appropriate in the case of Trinidad and Tobago. Specifically, we use the Trinidad and Tobago labour force survey to examine whether active job search is important in determining the labour market transitions of the non-employed. Our results indicate that in Trinidad and Tobago males, who under the standard criteria would be considered out of the labour force because they report willingness to work but are not currently searching for a job, are appropriately classified as unemployed. Further evidence suggests that this may be because job search may not be as meaningful in rural as it is in urban areas.