Spatial Interactions Between Growth and Rural Unemployment, Considering Climate Variability in Brazil and Mexico (2012–2024)

This paper examines the relationship between economic growth and rural unemployment in Brazil and Mexico, incorporating the effects of climate variability and spatial interactions. Okun’s Law serves as the theoretical framework, and a dynamic spatial panel model is applied to estimate short-term causal effects. The analysis uses data from Brazil’s IBGE, Mexico’s INEGI, and the U.S. NCEI. The results indicate that Okun’s Law is only partially validated in Mexico, where lagged income growth reduces rural unemployment, while in Brazil, the relationship is not statistically confirmed. Climate variables also play a critical role: higher local temperatures reduce unemployment in Brazil and, with a lag, in Mexico, although temperature increases in neighboring regions raise unemployment in Mexico. Rainfall has a consistent positive effect on rural unemployment in both countries, highlighting the disruptive impact of extreme weather events. From a spatial perspective, no contemporaneous effects are observed. However, lagged spatial effects are negative in Brazil and positive in Mexico, suggesting different adjustment dynamics across territories. Overall, the findings reveal that climate variability influences the growth-unemployment nexus differently depending on the national context and temporal dimension. These results underscore the importance of designing public policies that integrate territorial coordination, address the differentiated impacts of climate variability, and strengthen the adaptive capacity and resilience of rural areas in Latin America.