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Work Contracts and Earnings Inequality: The Case of Chile

  • Catalina Amuedo-Dorantes

Great social inequality has been one of the worrisome features of economic development in Latin America. This study focuses on Chile, one of Latin America's fastest growing economies with one of the highest levels of income inequality during the 1990s. Using micro-level data from the 1994 and 2000 Encuestas de Caracterizacion Socio-Economica, this article examines the role of work contracts in explaining male and female earnings and earnings inequality among wage and salary workers over the second half of the 1990s. The analysis distinguishes between wage and salary work without a work contract - referred to as 'informal' work, and wage and salary work with a work contract. Within the latter group, the study further differentiates by the type of work contract held, such as permanent and a variety of contingent work contracts. The findings reveal that the majority of employees in informal and contingent wage and salary work arrangements earned significantly less than their permanent counterparts. Additionally, informal and contingent wage and salary work arrangements accounted for a small, although increasing, fraction of male and female earnings inequality from 1994 to 2000. Finally, the proliferation of seasonal, fixed-term, and informal wage and salary work arrangements has been one of the few economically significant factors in explaining changes in male and female earnings inequality over the second half of the 1990s.

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Article provided by Taylor & Francis Journals in its journal Journal of Development Studies.

Volume (Year): 41 (2005)
Issue (Month): 4 ()
Pages: 589-616

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Handle: RePEc:taf:jdevst:v:41:y:2005:i:4:p:589-616
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  1. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
  2. Catalina Amuedo-Dorantes, 2000. "Work transitions into and out of involuntary temporary employment in a segmented market: Evidence from Spain," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(2), pages 309-325, January.
  3. Bigsten, Arne & Kebede, Bereket & Shimeles, Abebe & Taddesse, Mekonnen, 2003. "Growth and Poverty Reduction in Ethiopia: Evidence from Household Panel Surveys," World Development, Elsevier, vol. 31(1), pages 87-106, January.
  4. Randolph, Susan M. & Lott, William F., 1993. "Can the Kuznets effect be relied on to induce equalizing growth?," World Development, Elsevier, vol. 21(5), pages 829-840, May.
  5. Jacobsen, Joyce P & Rayack, Wendy L, 1996. "Do Men Whose Wives Work Really Earn Less?," American Economic Review, American Economic Association, vol. 86(2), pages 268-73, May.
  6. Sanders Korenman & David Neumark, 1991. "Does Marriage Really Make Men More Productive?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 282-307.
  7. Eng Seng Loh, 1996. "Productivity Differences and the Marriage Wage Premium for White Males," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 566-589.
  8. Joni Hersch & Leslie S. Stratton, 2000. "Household Specialization and the Male Marriage Wage Premium," ILR Review, Cornell University, ILR School, vol. 54(1), pages 78-94, October.
  9. Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 159-74, February.
  10. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
  11. David H. Autor, 2000. "Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment," JCPR Working Papers 153, Northwestern University/University of Chicago Joint Center for Poverty Research.
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