More but not better jobs in Chile? The fundamental importance of open-ended contracts

Abstract

Chilean governments since 1990 have relied on economic growth to generate employment, higher wages and better conditions of employment. But the results of this policy have been mixed: quantitative improvements in employment and wages have not been matched by improvements in job quality. Contrasting Chile’s seemingly rigid regulatory framework with its actual labour market flexibility, the authors stress the importance of employment conditions in assessing labour market performance. They empirically explore the effects of individual and job characteristics on employment and income-generating capabilities, whose most powerful determinant, they find, is employment under an open-ended contract. They conclude with a discussion of policy implications.