Much of Latin American economic analysis for many years has been an exercise in doomsaying. Of late it has centered on the three following contemporary labor market tendencies, argued by the Economic Commission for Latin America, among others, as unanticipated and dysfunctional consequences of earlier economic policies: (1) under-expansion of manufacturing employment and overexpansion of service sector employment; (2) over-urbanization; and (3) increased disguised unemployment in the cities. Since these generalizations are almost universally accepted, any author, therefore, who seeks to challenge them is unique and not merely from an academic standpoint. To negate successfully the ECLA position would question a myriad of labor policy recommendations being readied for implementation or actually in force.
Ramos examines age-sex structure, per capita income, and geographical variables for their relationship to labor force participation rates. He shows that education, skill, and salaried employment grew relatively faster than the labor force itself and interprets these data to mean that disguised unemployment has declined and that qualitative labor force improvements have made a positive contribution to economic development. In Chapter III he provides a very lucid and systematic explanation of shifts in the Latin American labor force since 1940 and asserts that the theoretical framework used by ECLA to predict sectoral shifts in employment has been misused. In the final two chapters, Ramos first broadens his discussion to draw comparisons with the United States, and then returns to the alleged inapplicability of ECLA doctrine with regard to labor and development.
The labor problem in development becomes one of skill shortages and labor factor immobilization and its resolution rests with education and better labor market operation. For Ramos “over-urbanization” is merely rural labor allocated to more productive urban-based activities. Moreover, industrial employment stagnancy reflects not abnormality but the upgrading of labor in this sector coupled with the reallocation of excess labor supplies to more efficient use in the services sector. ECLA policy should, therefore, not seek to reverse these trends, for this would return labor to less productive pursuits, but rather to ensure that no bottlenecks of skilled labor develop and that access to these jobs remain open.
Many readers no doubt will come away from this book unhappy. Revolutionaries will repudiate its status quo implications; demographers will question the exclusion of population growth variables; empiricists will be uneasy over the data inputs (primarily census data from selected countries); and, no doubt, many readers will also lament the reliance on gross income data rather than income distributed by size, share, household units, and so forth.
To discard Professor Ramos’ book solely on the basis of any of the above reservations would be however, short-sighted and unjust. In the first place, Ramos has very systematically described the current structure of the Latin American labor force and in so doing has brought out the causal factors now shaping it. In particular, the importance of technology and its corollary labor skill are evident. Secondly, the inadequacy of ECLA employment theory has been brought more clearly into focus. Particularly salient should be the hazards of further efforts to create employment based on capital investment in secondary sector economic activities.
