Informality and Wage Setting Policies in Latin America: Informality in Latin American Labor Markets

September 20, 2022 | For decades, many Latin American economies have displayed low rates of economic growth and stagnant labor productivity accompanied by high and increasing levels of income and wage inequality.

These economies are also characterized by costly and burdensome labor regulations that are imperfectly enforced, which led to the high and persistent levels of informality observed in the region. While this increases the level of flexibility, it may also induce less investment in human capital, higher earnings volatility, greater misallocation of resources across firms and sectors, and result in lower aggregate productivity and growth. Moreover, informal workers typically do not have access to social security and unemployment insurance, and they are not covered by minimum wage legislation.

Leading scholars will discuss issues related to wage setting and labor market informality in Latin America during the academic conference, which will be followed by a moderated policy discussion combining a number of these scholars with a group of policymakers with specific expertise for this region.