Informality and Employment Quality in Argentina. Country Case Study on Labor Market Segmentation

Abstract

This article examines employment quality and labor market segmentation in Argentina. The labor market in the country is marked by heterogeneity; the rate of informal employment is high, though it diminished significantly during the 2003-2011 period. This document analyzes the major changes that have occurred in terms of employment quality over the course of the last two decades, as well as how those changes are linked to economic policy and labor market regulations. Different types of precarious employment are described and quantified: informal salaried employment; unskilled (or “subsistence”) self-employment; and atypical registered salaried employment. The phenomenon of segmentation is then analyzed taking into account factors like employment mobility and exploring possible sub-segments that may exist within formal salaried employment, informal salaried employment, and self-employment. Finally, on the basis of the gaps between wages in different employment segments and sub-segments, hypotheses that account for segmentation are assessed. The evidence indicates that the most far-reaching factor affecting job quality is informal employment which is, in turn, associated with an array of factors both structural and regulatory in nature. The estimations regarding wage gaps demonstrate that segmentation is, in fact, linked to informality; there does not appear to be support for the hypothesis that employment segmentation is linked to contract type within formal salaried employment or within informal salaried employment.

Keywords: informal employment, job quality, labor market segmentation, employment mobility, employment protection, Argentina

JEL Classification: J21, J31, J80, O17