Transitions to Formality and Declining Inequality: Argentina and Brazil in the 2000s

MAURIZIO, ROXANA

DEVELOPMENT AND CHANGE

Wiley

Lugar: La Haya; Año: 2015 vol. 46 p. 1047 - 1079

0012-155X

Although inequality and labour informality continue to be distinctive characteristics of Argentina and Brazil, during the last decade the two countries have been successful in reversing the negative trends of the 1990s. This article presents a comparative analysis of the labour formalization process that took place in Argentina and Brazil during the 2000s. It studies the flows towards labour formality, what caused them, and the interrelations of this process with the changes that occurred in labour institutions and the decline in income inequality. The study contributes to two debates: the role of labour market flexibilization in employment formalization, and the decline in income inequality. Most of the literature emphasizes the evolution of returns to education; this study complements this approach by analysing the contribution of formalization to the decline in inequality in Argentina and Brazil. The results show that labour formalization has reached all categories of workers,that it has been accompanied by real minimum wage increases, and that it has had an equalizing effect.