Labor dynamics in emerging economies during economic cycles differ from those in developed economies. The study compared Mexico and Canada, finding that trend shocks have a stronger impact on consumption in Mexico, leading to unusual fluctuations in employment. This is due to the large informal labor sector in emerging economies. By considering labor dynamics and using specific preferences, the model better matches the actual employment trends in emerging economies. Trend shocks still play a significant role in driving business cycles in emerging economies, but their impact is different from that in developed economies.