Misery Index Corrected by Informality: Applicable to Venezuela

• Main Authors: Josefa Ramoni Perazzi, Giampaolo Orlandoni Merli
• Format: Article
• Language: English
• Published: Universidad EAFIT 2013-11-01
• Series: Ecos de Economía
• Subjects: Indice de miseria; Pobreza; Empleo en el sector informal; Venezuela
• Online Access: http://publicaciones.eafit.edu.co/index.php/ecos-economia/article/view/2297

This paper suggests a variation of the IMO index (Okun's Misery Index), adapting it to markets with these characteristics, adding the ESI level (Employment in the Informal Sector) to the unemployment level. This research compares the evolution of several standard misery indexes in several zones during the last decades, with emphasis on the case of Venezuela, for which the new proposed index is also estimated. Results show improvement in the well-being of groups of countries under study, compared to the deterioration of the indicator in Venezuela. In general terms, the IMO is controlled by unemployment, except in Venezuela. However, preponderance of inflation over unemployment in this country seems to occur by the underestimate that the unemployment rate has on the Venezuelan labor market situation.