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How Feminized is the LA Informal Sector and why? Evidence from LCSPG

How Feminized is the LA Informal Sector and why? Evidence from LCSPG. Wendy Cunningham April 6, 2005 II Workshop de los Puntos Focales de Género . Why do we care about the informal sector? . Wages are lower in certain segments of the sector, relative to the formal sector

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How Feminized is the LA Informal Sector and why? Evidence from LCSPG

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  1. How Feminized is the LA Informal Sector and why? Evidence from LCSPG Wendy Cunningham April 6, 2005 II Workshop de los Puntos Focales de Género

  2. Why do we care about the informal sector? • Wages are lower in certain segments of the sector, relative to the formal sector • Working conditions are more difficult to monitor • Workers do not have access to many social protection mechanisms • Governments do not collect taxes from the sector • The informal sector may have lessons for how to improve the formal sector

  3. How de we define the informal sector? • Depends on the information available in the country: • Workers in firms with fewer than 6 workers (ILO definition) • Workers who do not collect benefits (highly correlated with the firm size criteria) • Workers without a formal work contract • The urban informal sector has 3 primary sub-sectors • Informal wage workers (16%) • Self-employed (70%) • Unpaid (6%)

  4. Message 1: Men dominate the informal sector, but women are disproportionately employed in the informal sector

  5. Working Women Have Higher Participation Rates in the Informal Sector than do Working Men Source: Cunningham (2004) “Gender and Labor Market Outcomes” unpublished.

  6. While Men Dominate the Informal Sector, women are disproportionately in the Informal Sector Source: Cunningham (2001) “Sectoral Allocation by Gender” PRWP # 2742 (World Bank)

  7. … and this tendency has changed (inconsistently) over time The change of the share of women’s employment in each sector, over the period 1989-1999 --- indicates that the changes is “not statistically significant” Source: Cunningham (2001) “Sectoral Allocation by Gender” PRWP # 2742 (World Bank)

  8. Message 2: Disaggregating the General Trends is Important

  9. Women’s informal sector work differs from that of men. . . % of LF, by sex, in each sub-sector Source: Cunningham (2004) “Gender and Labor Market Outcomes” unpublished.

  10. . .. Though this Greatly Depends on Women’s Family Status Source: Cunningham (2000) “Breadwinner v. Caregiver” in The Economics of Gender in Mexico (World Bank)

  11. Message 3: Demand- and Supply-side factors are important for understanding why men and women are employed in their particular sectors

  12. Why are women disproportionately working in the informal sector? Some hypotheses. . . • Demand factors: Discrimination among formal sector employers -> push women to informal sector • Pure – formal sector employers just don’t like women • Statistical – some women are costly, so formal sector employers don’t take the chance with any women • Maternity leave • Frequent movement in and out of labor force • Supply factors that make informal sector attractive • Balance home work and market work • Safety net for the household Some evidence. . .

  13. Demand: Discrimination Employer perceptions of Male and Female workers in the Mexican Tourism Sector (in order of most cited) Source: Chant (1991) Women and Survival in Mexican Cities (Manchester University Press)

  14. Demand: Statistical Discrimination Cost of Maternity Leave Source: www.ilo.org

  15. Supply: Balance home work and market work Weekly hours dedicated to care of the home, by role in hh Motivation for Not Wanting to be in the Formal Sector Source: Cunningham (2004) “Group-Based Inequalities” in Inequality in LAC”; Maloney (2004) “Informality Revisited” World Development

  16. Supply: Balance home work and market work • Home-based workers • Empirics show they tend to be: • Married women (male marital status NS) • Motherhood does not seem to matter • Part-time workers (male part-time NS) • Interview data (from women) gives insight to motivations for such patterns: • Flexible work hours • Ability to work from home (husband issues, household duties, gender role “appearances”) Source: Cunningham (2004) “The Home as the Factory Floor” PRWP #3295.

  17. Supply: Safety net for the hh When the economy is in crisis, the wife: And Argentine working-class women tell us: • Easier for women than men to find employment – identity • Women’s “skills” demanded by the LF; resistant to economic shocks • Already have “jobs” that expand when hh needs ↑ Source: Cunningham (2000) “Breadwinner v. Caregiver” in The Economics of Gender in Mexico (World Bank), Cunningham (2001) Household Risk, Self-Insurance and Coping Strategies in Urban Argentina (World Bank)

  18. Policy • Demand side • Enhance labor market flexibility (part time work) to reduce gender-specific costs • Shift gender-specific costs to the society? • Supply side • Adjust the formal sector to mimic the positive aspects of the informal sector (part time, flexible work sites, leaves of absence supported by labor legislation) • Enhance LM flexibility (enable turnover) • Better information for LF entry • Socialization of gender roles (male and female) • Extend SP to those not in the formal sector

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