Low-pay work has been increasing in prevalence in many industrial countries. Following standard wage/price-setting theory, this increase should reduce structural unemployment, because labour market flexibility increases and labour costs decrease. However, a Keynesian perspective challenges this...

The objective of this research is to estimate the long-run elasticities of labour demand for Uruguay (1986-2005). The elasticities were estimated using Johansen cointegration analysis and the vector error correction model. We found that the aggregate labour demand is relatively inelastic with...