Typologies of informality: Socio-structural factors that influence its presence in the Panamanian labor market
DOI:
https://doi.org/10.37387/ipc.v12i3.392Keywords:
informal employment, labor market, typologies, cluster analysis, dual economyAbstract
The Panamanian labor market experienced a steady increase in its rate of informal employment between 2018 and 2022. By 2023, 47.4% of employed individuals were working under informal conditions. If we understand this phenomenon as a reflection of market rigidities that lead to precariousness, it is essential to understand its characteristics in depth to formulate and implement effective public policies that improve the outcomes and potential of the labor market. In this study, we expand the definition and operationalization of the concept of informality to include all individuals who are not direct contributors to the Social Security Fund. This helps us explore, across all economic sectors, the individuals living in informality, the most relevant variables that distinguishes them, whether different types of informality exist, and the major differences between these groups. Using the 2019 and 2022 Multiple Purpose Survey by INEC, we develop typologies of people living in informality through cluster analysis. The analysis suggests that different types of informality exist, that there were no major changes in the composition of these groups as a result of the 2020-2021 pandemic, and that the roles people play in their households remain a determining variable for understanding these dynamics. In the final section, we provide some policy implications.
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