Nobel Prize in Economics highlights labor and policy challenges in Chile and Peru

The Nobel Prize in Economics has been awarded to Robert Hall and Michael Woodford for their work on New Keynesian models, which explain how stabilization policies affect economic cycles.

In Chile, economists note that recent unemployment figures of 9.6% reflect a struggle in job creation rather than just job loss. Applying Hall’s theories, hiring is viewed as an investment where companies incur significant costs for searching, selecting, and training staff. During periods of uncertainty, the perceived value of this investment decreases, leading to fewer vacancies. Current Chilean data shows that while the probability of losing a formal job remains low, the transition from unemployment back to work has become less frequent, particularly in informal sectors.

In Peru, the application of these economic models faces unique challenges. The country's economic policy is constrained by high dependence on volatile mineral prices, which accounted for 66.7% of total exports in 2025, and massive labor informality. Additionally, Peru remains vulnerable to geopolitical shifts in global trade, climate disasters, and domestic political fragmentation.