Labor Market Informalization and Social Policy: Distributional Links and the Case of Homebased Workers

Maria Floro () and Lourdes Beneria
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Maria Floro: American University Department of Economics, http://www.american.edu/cas/econ/faculty/floro.htm

No 60, Vassar College Department of Economics Working Paper Series from Vassar College Department of Economics

Abstract: This paper is based on the notion that the nature of current labor market informalization requires rethinking in order to guide action and formulate social policies for eliminating poverty and reducing economic inequality and job insecurity. It explores conceptually and empirically the dynamics of informality and demonstrates the interconnectedness of job precariousness, vulnerability and gender relations.There are five related aspects to this process of informalization that are explored in the conceptual framework namely: 1) increasing labor market flexibilization; 2) the weakening (even absence) of the labor contract; 3) rising income inequality and worker differentiation; 4) institutional questions related to ownership and appropriation of production; and 5) gender-related socially ascribed positions in society and within the household. The empirical section is based on the 2002 sample survey data of poor urban households engaged in home-based work collected in Bolivia and Ecuador as part of a four-country research project that attempts to understand the roles of financial and labor resources in the coping strategies of urban poor households as their countries undergo rapid global market integration, financial crises and economic restructuring. Using employment and decisionmaking information on heads and spouses in the Bolivian and Ecuador sample data, the empirical investigation provides a gendered analysis of the informalization of employment among men and women respondents in couples (or dual adults) households to highlight the interconnectedness of job precariousness and gendered relations. Specifically, we adopt a gendered approach in examining the link between gender-based roles and relations with worker vulnerability. The findings in the study points to the importance of rethinking social protection program for workers laboring in informalized settings. It concludes with a discussion of lthe different possible avenues for action to dealing with poverty and redressing regressive tendencies in the distribution of income and resources in the informal economy.

Date: 2004-08
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