Informal Employment in Argentina : Causes and Consequences

Abstract

This report presents the final results
 and conclusions of a two-year program developed by a World
 Bank team in Argentina, to analyze the determinants of
 informality and its impact on poverty and equity.
 Informality in the labor market has become a central concern
 for policy makers and the society at large in Argentina. The
 long upward trend in informal employment until recent year
 has been viewed as a deterioration in working conditions
 that is behind the sustained rise in poverty and inequality
 in the last quarter of the twentieth century. While some of
 the possible causes for the rise in informality have been
 studied, their relative importance remains unclear and its
 links with poverty and inequality have not been examined in
 detail. A primary objective of the program is to deepen the
 shared work with the Argentine government and civil society
 on socio-economic development and equity issues. The aim has
 been to analyze and propose policy options for the labor
 market that respond to the Government's priorities, are
 technically sound, and provide an open menu for discussion.
 The study of informality in the labor market is not an empty
 field in Argentina. Many local analysts have studied its
 causes and consequences, and this report built on this work.
 A key aspect of the program was to draw on the extensive
 local analytical studies on the issues and sustain an active
 interaction with government counterparts and civil society
 through technical workshops, meetings and other outreach
 efforts. This report focused on discussing the evolution,
 determinants, and policy options to reduce labor informality
 in Argentina and its impacts. By developing a common base of
 diagnoses with the government, the program set a path for
 further discussions and collaborations. Following this
 process, the Ministry of Labor has already asked the Bank to
 collaborate on a new program that will focus on labor
 markets, social protection, and income distribution, looking
 for policies that would result in better and more effective
 policies to increase equity in Argentina.