Regional inequality in multidimensional quality of employment (QoE): insights from Chile, 1996-2017

This paper uses a multi-dimensional methodology for measuring the quality of employment (QoE) across Chile's regions using household survey data from 1996 – 2017. The paper shows how much a regional perspective can add to an analysis of the QoE and how it can inform policy makers in a way that goes beyond traditional variables such as participation or unemployment rates, which are not always good indicators of labour market performance in developing countries with large informal sectors. Building on previous work that measures QoE deprivation, we use the Alkire/Foster (AF) method to construct a synthetic indicator of the quality of employment (QoE) at an individual level. We select three dimensions that must be considered as both instrumentally and intrinsically important to workers: income, job security and employment conditions. Job security is then divided into two sub-dimensions (occupational status and job tenure), as is employment conditions (social security affiliation and excessive working hours). A threshold is then established within each dimension and sub-dimension to determine whether a person is deprived or not within each dimension, before calculating composite levels of deprivation. The results generated by this index highlight important differences between Chile's regions, but also a process of convergence, which has been driven by employment regulation on minimum wages and the statutory working week in particular. National policies such as the improvement of educational standards have also contributed to this process. On the one hand, this paper illustrates the importance of public policies in labour market performance, and on the other, the index also enables policy makers to focus more precisely on the most vulnerable groups of workers in the labour market. This paper opens up important avenues for future research: once a QoE index has been developed, it can be used to track workers' employment trajectories using either panel or administrative data. This would allow policy makers to understand, whether and to what extent workers become trapped in poor quality jobs, and what active labour market policies could do to help them.