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Monetary Fiscal Contributions to Households and Pension Fund Withdrawals during the COVID-19 Pandemic: An Approximation of Their Impact on Construction Labor Supply in Chile

Author

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  • Byron J. Idrovo-Aguirre

    (Gerencia de Estudios, Cámara Chilena de la Construcción, Santiago 7560860, Chile)

  • Javier E. Contreras-Reyes

    (Facultad de Ciencias, Instituto de Estadística, Universidad de Valparaíso, Valparaíso 2360102, Chile)

Abstract

We show statistical evidence that pension fund withdrawals and the Emergency Family Income (EFI) increased the likelihood that a laid off construction worker would reject a proposal for a formal employment contract. This favors the hypothesis that pension fund withdrawals and government subsidies related to the health crisis have, to some extent, contributed to the shortage of formal labor in the construction sector. Based on estimations of the logit model, we found that rejection probability increased with work experience (approximated by the worker’s age). For example, the probability of not accepting a formal contract for a highly experienced worker, who withdrew funds from their mandatory private Pension Fund Administrator and received the EFI, increased by 28%. The figure is approximately 2.5 times the rejection probability of a worker with the same experience but without having received this additional income.

Suggested Citation

  • Byron J. Idrovo-Aguirre & Javier E. Contreras-Reyes, 2021. "Monetary Fiscal Contributions to Households and Pension Fund Withdrawals during the COVID-19 Pandemic: An Approximation of Their Impact on Construction Labor Supply in Chile," Social Sciences, MDPI, vol. 10(11), pages 1-10, November.
    • Handle: RePEc:gam:jscscx:v:10:y:2021:i:11:p:417-:d:670453
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    References listed on IDEAS

    as
    1. Byron J. Idrovo-Aguirre & Javier E. Contreras-Reyes, 2021. "The Response of Housing Construction to a Copper Price Shock in Chile (2009–2020)," Economies, MDPI, vol. 9(3), pages 1-11, June.
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    4. Jere R. Behrman & Maria Cecilia Calderon & Olivia S. Mitchell & Javiera Vasquez & David Bravo, 2011. "First-Round Impacts of the 2008 Chilean Pension System Reform," Working Papers wp245, University of Michigan, Michigan Retirement Research Center.
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    6. Constanza Fosco & Felipe Zurita, 2021. "Assessing the short-run effects of lockdown policies on economic activity, with an application to the Santiago Metropolitan Region, Chile," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-23, June.
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    8. Nicolò Gozzi & Michele Tizzoni & Matteo Chinazzi & Leo Ferres & Alessandro Vespignani & Nicola Perra, 2021. "Estimating the effect of social inequalities on the mitigation of COVID-19 across communities in Santiago de Chile," Nature Communications, Nature, vol. 12(1), pages 1-9, December.
    9. Contreras-Reyes, Javier E. & Idrovo-Aguirre, Byron J., 2020. "Backcasting and forecasting time series using detrended cross-correlation analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 560(C).
    10. Byron J. Idrovo-Aguirre & Francisco J. Lozano & Javier E. Contreras-Reyes, 2021. "Prosperity or Real Estate Bubble? Exuberance Probability Index of Real Housing Prices in Chile," IJFS, MDPI, vol. 9(3), pages 1-24, September.
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