Defining unemployment in developing countries : the case of Trinidad and Tobago

The International Labour Organisation (ILO) argues for relaxing the standard definition of unemployment in developing countries where labour markets are not as efficient as those in the developed world. We examine whether such an extension of the standard definition is appropriate in the case of Trinidad and Tobago. Specifically, we use individual behaviour to classify persons into labour market states, rather than a priori criteria like job search. The Trinidad and Tobago Continuous Survey Sample of Population provides data uniquely suited to this purpose. 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.