Chapter 5. Regional Human Development Report 2021

A characterizing feature of labour markets in Latin America and the Caribbean is their high informality levels.

The formal-informal segmentation of the labour force results from a mix of legal exclusions and non-compliance by firms and workers.

Segmented labour markets are a source of inequality and one of the contributing factors in low productivity growth. The mix of contributory and non-contributory social insurance programmes across the region, coupled with transitions between formality and informality, and, at times, inconsistent rules and conditions for access, results in reduced efficacy of insurance and contradictory impacts on inequality.