The Chilean Labor Market: Job Creation, Quality, Inclusiveness, and Future Challenges

Abstract

This paper analyzes recent labor market developments in the Chilean economy. The evidence shows a booming labor market with strong job creation since 2010. Most of the jobs created during the past three years are quality jobs—that is, jobs with a written contract and whose employers have made the corresponding payments toward pensions, healthcare, and unemployment insurance. We show that a combination of economic growth and specific policies seems to be the driving force behind the strong creation of quality jobs. Additionally, we show that the rapid job creation has been inclusive and constitutes one of the potential explanations for the fall in income inequality observed during the past three years. However, a further reduction in income inequality remains an important challenge for the future. Greater access to a quality education for vulnerable groups is the key to achieving that goal