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Labour formalization and declining inequality in Argentina and Brazil in the 2000s

Published by: ILO


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Inequality and labour informality are still distinctive characteristics of Latin America. However, most of the countries have succeeded in reversing the upward trends in both informality and inequality in the 1990s. These positive dynamics have been noteworthy in Argentina and Brazil. This paper analyses the processes of labour formalization in these countries and its interrelation with the evolution of income inequality over the 2000s. It contributes to two current debates. The first one refers to the role of labour market flexibilization in employment formalization. The second one is related to the reduction of income inequality. Most of the literature places emphasis on the evolution of the returns to education. This paper complements this approach by analysing the contribution of formalization to the reduction of inequality in these countries.

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General Information

SDGs Goal 8: Decent work and economic growth Goal 10: Reduced inequalities
Published
2014
Thematic Area
Inclusive economic growth for poverty eradication
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Promote inclusive and sustainable economic growth, employment and decent work for all

Over the past 25 years the number of workers living in extreme poverty has declined dramatically, despite the long-lasting impact of the economic crisis of 2008/2009. In developing countries, the middle class now makes up more than 34 percent of total employment – a number that has almost tripled between 1991 and 2015.

However, as the global economy continues to recover we are seeing slower growth, widening inequalities and employment that is not expanding fast enough to keep up with the growing labour force. According to the International Labour Organization, more than 204 million people are unemployed in 2015.

The Sustainable Development Goals (SDGs) aim to encourage sustained economic growth by achieving higher levels of productivity and through technological innovation. Promoting policies that encourage entrepreneurship and job creation are key to this, as are effective measures to eradicate forced labour, slavery and human trafficking. With these targets in mind, the goal is to achieve full and productive employment, and decent work, for all women and men by 2030.

Decent work is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals.

Learn more about the targets for Goal 8.

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Promote inclusive and sustainable economic growth, employment and decent work for all

Over the past 25 years the number of workers living in extreme poverty has declined dramatically, despite the long-lasting impact of the economic crisis of 2008/2009. In developing countries, the middle class now makes up more than 34 percent of total employment – a number that has almost tripled between 1991 and 2015.

However, as the global economy continues to recover we are seeing slower growth, widening inequalities and employment that is not expanding fast enough to keep up with the growing labour force. According to the International Labour Organization, more than 204 million people are unemployed in 2015.

The Sustainable Development Goals (SDGs) aim to encourage sustained economic growth by achieving higher levels of productivity and through technological innovation. Promoting policies that encourage entrepreneurship and job creation are key to this, as are effective measures to eradicate forced labour, slavery and human trafficking. With these targets in mind, the goal is to achieve full and productive employment, and decent work, for all women and men by 2030.

Decent work is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals.

Learn more about the targets for Goal 8.

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The SDG Fund response

The SDG Fund supports initiatives that tackle inclusive growth from a multisectoral perspective and address the following dimensions:

  • Create opportunities for good and decent jobs and secure livelihoods
  • Support inclusive and sustainable business practices
  • Promote better government policies and fair and accountable public institutions

For example:

  • In Cote d’Ivoire, the SDG Fund programme to reduce poverty in the region of San Pedro is working to avoid the worst forms of child labour. Young people (all at least 15 years of age and thus legally permitted to work under local law) have received vocational training and are engaged in income generating activities including aquaculture and chicken rearing, both of which rely on traditional know how and are considered to be very low risk activities. The activities take place with the full support of parents and avoid exploitation of young people in cacao plantations.
  • In Honduras, the SDG-F will support income generation through the revitalization of the Lenca culture and the development of sustainable tourism micro businesses in the area, led by youth and women.
  • In Peru, the SDG Fund is contributing to establish an inclusive value chain in the production of quinoa and other Andean grains, so that the increased demand in the international market can convert into economic and social improvements of currently vulnerable producers.
[format] => full_html [safe_value] =>

The SDG Fund response

The SDG Fund supports initiatives that tackle inclusive growth from a multisectoral perspective and address the following dimensions:

  • Create opportunities for good and decent jobs and secure livelihoods
  • Support inclusive and sustainable business practices
  • Promote better government policies and fair and accountable public institutions

For example:

  • In Cote d’Ivoire, the SDG Fund programme to reduce poverty in the region of San Pedro is working to avoid the worst forms of child labour. Young people (all at least 15 years of age and thus legally permitted to work under local law) have received vocational training and are engaged in income generating activities including aquaculture and chicken rearing, both of which rely on traditional know how and are considered to be very low risk activities. The activities take place with the full support of parents and avoid exploitation of young people in cacao plantations.
  • In Honduras, the SDG-F will support income generation through the revitalization of the Lenca culture and the development of sustainable tourism micro businesses in the area, led by youth and women.
  • In Peru, the SDG Fund is contributing to establish an inclusive value chain in the production of quinoa and other Andean grains, so that the increased demand in the international market can convert into economic and social improvements of currently vulnerable producers.
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  • Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries
  • Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors
  • Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services
  • Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead
  • By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
  • By 2020, substantially reduce the proportion of youth not in employment, education or training
  • Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
  • Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment
  • By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products
  • Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
  • Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries
  • By 2020, develop and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organization
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  • Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries
  • Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors
  • Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services
  • Improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programmes on sustainable consumption and production, with developed countries taking the lead
  • By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
  • By 2020, substantially reduce the proportion of youth not in employment, education or training
  • Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
  • Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment
  • By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products
  • Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all
  • Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries
  • By 2020, develop and operationalize a global strategy for youth employment and implement the Global Jobs Pact of the International Labour Organization
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Reduce inequality within and among countries

It is well documented that income inequality is on the rise, with the richest 10 percent earning up to 40 percent of total global income. The poorest 10 percent earn only between 2 and 7 percent of total global income. In developing countries, inequality has increased by 11 percent if we take into account the growth of population.

These widening disparities are a call for action that require the adoption of sound policies to empower the bottom percentile of income earners and promote economic inclusion of all regardless of sex, race or ethnicity.

Income inequality is a global problem that requires global solutions. This involves improving the regulation and monitoring of financial markets and institutions, encouraging development assistance and foreign direct investment to regions where the need is greatest. Facilitating the safe migration and mobility of people is also key to bridging the widening divide.

Reducing inequalities is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals.

Learn more about the targets for Goal 10.

[format] => full_html [safe_value] =>

Reduce inequality within and among countries

It is well documented that income inequality is on the rise, with the richest 10 percent earning up to 40 percent of total global income. The poorest 10 percent earn only between 2 and 7 percent of total global income. In developing countries, inequality has increased by 11 percent if we take into account the growth of population.

These widening disparities are a call for action that require the adoption of sound policies to empower the bottom percentile of income earners and promote economic inclusion of all regardless of sex, race or ethnicity.

Income inequality is a global problem that requires global solutions. This involves improving the regulation and monitoring of financial markets and institutions, encouraging development assistance and foreign direct investment to regions where the need is greatest. Facilitating the safe migration and mobility of people is also key to bridging the widening divide.

Reducing inequalities is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals.

Learn more about the targets for Goal 10.

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The SDG Fund response

The SDG Fund programmes undertake situation analysis to understand what inequalities underpin the challenges in the communities and countries where we work. By doing this, the programmes pay special attention to inequalities suffered by women, girls, indigenous people, older people, youth, and those living in geographical isolated communities. Our initiatives take inequalities into account and put into practice solutions to address them, responding to the 2030 Agenda’s mandate of leaving no one behind.

For example,

  • In Tanzania, the SDG Fund is working with the national government to scale-up one of its existing national programmes to reach all the extreme poor living below the food poverty line. In particular, it’s targeting women, children, youth, elderly, people living with disabilities and people living with HIV and AIDS. The programme employs conditional cash transfers, promoting employment through public works programmes, family planning awareness and primary and secondary school education.
  • In Bangladesh, the SDG Fund is working with ultra-poor women, particularly with those who are widowed, divorced or abandoned.  The programme is supporting the most vulnerable households to move out of poverty through public works jobs, education and financial literacy.
  • In Paraguay, the SDG Fund is supporting the government’s efforts to find integrated solutions to undernutrition and to address other health problems faced by indigenous and vulnerable rural households, particularly female-headed ones, to produce nutritious and diversified food production.
[format] => full_html [safe_value] =>

The SDG Fund response

The SDG Fund programmes undertake situation analysis to understand what inequalities underpin the challenges in the communities and countries where we work. By doing this, the programmes pay special attention to inequalities suffered by women, girls, indigenous people, older people, youth, and those living in geographical isolated communities. Our initiatives take inequalities into account and put into practice solutions to address them, responding to the 2030 Agenda’s mandate of leaving no one behind.

For example,

  • In Tanzania, the SDG Fund is working with the national government to scale-up one of its existing national programmes to reach all the extreme poor living below the food poverty line. In particular, it’s targeting women, children, youth, elderly, people living with disabilities and people living with HIV and AIDS. The programme employs conditional cash transfers, promoting employment through public works programmes, family planning awareness and primary and secondary school education.
  • In Bangladesh, the SDG Fund is working with ultra-poor women, particularly with those who are widowed, divorced or abandoned.  The programme is supporting the most vulnerable households to move out of poverty through public works jobs, education and financial literacy.
  • In Paraguay, the SDG Fund is supporting the government’s efforts to find integrated solutions to undernutrition and to address other health problems faced by indigenous and vulnerable rural households, particularly female-headed ones, to produce nutritious and diversified food production.
) ) ) [field_targets] => Array ( [und] => Array ( [0] => Array ( [value] =>
  • By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
  • By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
  • Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard
  • Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
  • Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations
  • Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions
  • Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies
  • Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
  • Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing States and landlocked developing countries, in accordance with their national plans and programmes
  • By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent
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  • By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average
  • By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status
  • Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard
  • Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality
  • Improve the regulation and monitoring of global financial markets and institutions and strengthen the implementation of such regulations
  • Ensure enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions
  • Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies
  • Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements
  • Encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing States and landlocked developing countries, in accordance with their national plans and programmes
  • By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent
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Economic growth has to be inclusive to ensure the wellbeing of the entire population. Inclusive growth requires full respect for human rights.

Inclusive growth generates decent jobs, gives opportunities for all segments of society, especially the most disadvantaged, and distributes the gains from prosperity more equally.

The first priority is to create opportunities for good and decent jobs and secure livelihoods for all. This will make growth inclusive and ensure that it reduces poverty and inequality. Better government policies, fair and accountable public institutions, and inclusive and sustainable business practices are essential parts of a Post-2015 agenda.

A second priority is to strive constantly to add value and raise productivity. Some fundamentals will accelerate growth everywhere:

  • Skills development
  • Supportive policies towards micro, small, and medium enterprises
  • The capacity to innovate and absorb new technologies
  • The ability to produce a higher quality and greater range of products
  • Infrastructure and other investments

Third, countries must establish a stable environment that enables business to flourish. Business wants a level playing field and to be connected to major markets. It also wants a simple regulatory framework that makes it easy to start, operate, and close a business. Small and medium firms that employ the most people are especially restricted by complicated regulations that can breed corruption.

Fourth, in order to bring new prosperity and new opportunities, growth must also usher in new ways to support sustainable consumption and production. It must also enable sustainable development.

The SDG Fund response

The SDG Fund supports initiatives that tackle inclusive growth from a multisectoral perspective and address the following dimensions:

  1. Create opportunities for good and decent jobs and secure livelihoods
  2. Support inclusive and sustainable business practices
  3. Promote better government policies and fair and accountable public institutions

For example:

  • In Mozambique, Sierra Leone and Ivory Coast, the SDG Fund will work with mineral extractive industries to generate economic growth and opportunities for the whole population. For example, in Mozambique, analysis indicates that the 5 largest projects in the country with an invesment of USD $3.4 billion, will generate only 33,000 direct jobs.
  • In Bangladesh and in Tanzania, the SDG Fund will contribute to the construction of the social protection systems and universal social safety nets, with special attention to the poorest women.
  • In Honduras the SDG-F will support the generation of income through the revitalization of the Lenca culture and the development of sustainable tourism micro businesses in the area, led by youth and women.
  • The armed conflict in Colombia has damaged production, institutions, food security, and social trust. Through the sustainable agricultural production of indigenous crops and their international commercialization, the SDG-F will create employment, ways of life, better nutrition, and, most importantly, peace in Cauca - one of the zones most affected by the long lasting conflict.
  • In Peru the SDG Fund will contribute to establishing an inclusive value chain in the production of quinoa and other Andean grains, so that the increase of demand in the international market can convert into economic and social improvements of currently vulnerable producers.



Current SDG Fund inclusive economic growth for poverty eradication programmes:

CountryProgramme TitleParticipating UN AgenciesTotal Budget  ($)
BangladeshStrengthening Women’s Ability for Productive New Opportunities (SWAPNO)UNDP,  ILO

4,613,000

ColombiaProductive and food secured territories for a peaceful and resilient population in strategic ecosystems in CaucaUNDP, UN Women, FAO, WFP

3,281,152

EthiopiaGender Equality and Women Empowerment - Rural Women Economic EmpowermentUN Women, FAO, IFAD, WFP

3,000,000

HondurasPromotion of Culture and Tourism for Local Development in Ruta LencaUNDP, UN Women

2,919,427

Côte d'Ivoire

Poverty reduction in San Pedro region

UNDP, FAO, UNICEF, UNFPA

3,310,000

MozambiqueMore and better jobs in Cabo Delgado province and Nampula province - Harnessing the opportunities of the New Economy in MozambiqueILO, UNDP, UNIDO, UN Women

3,000,000

occupied Palestinian territoryCreating one-stop-shop to create sustainable businesses” on Inclusive Economic Growth.UN Women, FAO, ITC

3,000,000

Peru

Economic Inclusion and Sustainable Development of Andean Grain producers in rural areas of extreme poverty in Ayacucho and PunoILO, FAO, UNESCO

3,880,790

Sierra LeoneEnabling Sustainable Livelihoods Through Improved Natural Resource Governance and Economic Diversification in the Kono District, Sierra LeoneUNDP, FAO

3,002,000

TanzaniaJoint programme to support Tanzania’s Productive Social Safety Nets (PSSN)UNDP, UNICEF, UNFPA, ILO

4,358,250

 

Total

34,364,619

Previous programmes:

Two of the MDG-F thematic windows encouraged practices related with inclusive growth, especially providing opportunities for the most vulnerable: youth, employment and migration and private sector and development. Some programmes on culture and development also tried to boost the economic potential of cultural industries to create livelihoods. Lessons learned from these programmes have been translated into a broader perspective on inclusive growth as a means of poverty reduction. 

[summary] => [format] => full_html [safe_value] =>

Economic growth has to be inclusive to ensure the wellbeing of the entire population. Inclusive growth requires full respect for human rights.

Inclusive growth generates decent jobs, gives opportunities for all segments of society, especially the most disadvantaged, and distributes the gains from prosperity more equally.

The first priority is to create opportunities for good and decent jobs and secure livelihoods for all. This will make growth inclusive and ensure that it reduces poverty and inequality. Better government policies, fair and accountable public institutions, and inclusive and sustainable business practices are essential parts of a Post-2015 agenda.

A second priority is to strive constantly to add value and raise productivity. Some fundamentals will accelerate growth everywhere:

  • Skills development
  • Supportive policies towards micro, small, and medium enterprises
  • The capacity to innovate and absorb new technologies
  • The ability to produce a higher quality and greater range of products
  • Infrastructure and other investments

Third, countries must establish a stable environment that enables business to flourish. Business wants a level playing field and to be connected to major markets. It also wants a simple regulatory framework that makes it easy to start, operate, and close a business. Small and medium firms that employ the most people are especially restricted by complicated regulations that can breed corruption.

Fourth, in order to bring new prosperity and new opportunities, growth must also usher in new ways to support sustainable consumption and production. It must also enable sustainable development.

The SDG Fund response

The SDG Fund supports initiatives that tackle inclusive growth from a multisectoral perspective and address the following dimensions:

  1. Create opportunities for good and decent jobs and secure livelihoods
  2. Support inclusive and sustainable business practices
  3. Promote better government policies and fair and accountable public institutions

For example:

  • In Mozambique, Sierra Leone and Ivory Coast, the SDG Fund will work with mineral extractive industries to generate economic growth and opportunities for the whole population. For example, in Mozambique, analysis indicates that the 5 largest projects in the country with an invesment of USD $3.4 billion, will generate only 33,000 direct jobs.
  • In Bangladesh and in Tanzania, the SDG Fund will contribute to the construction of the social protection systems and universal social safety nets, with special attention to the poorest women.
  • In Honduras the SDG-F will support the generation of income through the revitalization of the Lenca culture and the development of sustainable tourism micro businesses in the area, led by youth and women.
  • The armed conflict in Colombia has damaged production, institutions, food security, and social trust. Through the sustainable agricultural production of indigenous crops and their international commercialization, the SDG-F will create employment, ways of life, better nutrition, and, most importantly, peace in Cauca - one of the zones most affected by the long lasting conflict.
  • In Peru the SDG Fund will contribute to establishing an inclusive value chain in the production of quinoa and other Andean grains, so that the increase of demand in the international market can convert into economic and social improvements of currently vulnerable producers.

Current SDG Fund inclusive economic growth for poverty eradication programmes:

CountryProgramme TitleParticipating UN AgenciesTotal Budget  ($)
BangladeshStrengthening Women’s Ability for Productive New Opportunities (SWAPNO)UNDP,  ILO

4,613,000

ColombiaProductive and food secured territories for a peaceful and resilient population in strategic ecosystems in CaucaUNDP, UN Women, FAO, WFP

3,281,152

EthiopiaGender Equality and Women Empowerment - Rural Women Economic EmpowermentUN Women, FAO, IFAD, WFP

3,000,000

HondurasPromotion of Culture and Tourism for Local Development in Ruta LencaUNDP, UN Women

2,919,427

Côte d'Ivoire

Poverty reduction in San Pedro region

UNDP, FAO, UNICEF, UNFPA

3,310,000

MozambiqueMore and better jobs in Cabo Delgado province and Nampula province - Harnessing the opportunities of the New Economy in MozambiqueILO, UNDP, UNIDO, UN Women

3,000,000

occupied Palestinian territoryCreating one-stop-shop to create sustainable businesses” on Inclusive Economic Growth.UN Women, FAO, ITC

3,000,000

Peru

Economic Inclusion and Sustainable Development of Andean Grain producers in rural areas of extreme poverty in Ayacucho and PunoILO, FAO, UNESCO

3,880,790

Sierra LeoneEnabling Sustainable Livelihoods Through Improved Natural Resource Governance and Economic Diversification in the Kono District, Sierra LeoneUNDP, FAO

3,002,000

TanzaniaJoint programme to support Tanzania’s Productive Social Safety Nets (PSSN)UNDP, UNICEF, UNFPA, ILO

4,358,250

 

Total

34,364,619

Previous programmes:

Two of the MDG-F thematic windows encouraged practices related with inclusive growth, especially providing opportunities for the most vulnerable: youth, employment and migration and private sector and development. Some programmes on culture and development also tried to boost the economic potential of cultural industries to create livelihoods. Lessons learned from these programmes have been translated into a broader perspective on inclusive growth as a means of poverty reduction. 

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Economic growth is critical for poverty eradication.
Yet, an expanding economy does not mean that everyone benefits equally.

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Economic growth is critical for poverty eradication. Yet, an expanding economy does not mean that everyone benefits equally.

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However, most of the countries have succeeded in reversing the upward trends in both informality and inequality in the 1990s. These positive dynamics have been noteworthy in Argentina and Brazil. This paper analyses the processes of labour formalization in these countries and its interrelation with the evolution of income inequality over the 2000s. It contributes to two current debates. The first one refers to the role of labour market flexibilization in employment formalization. The second one is related to the reduction of income inequality. Most of the literature places emphasis on the evolution of the returns to education. This paper complements this approach by analysing the contribution of formalization to the reduction of inequality in these countries. [format] => [safe_value] => Inequality and labour informality are still distinctive characteristics of Latin America. 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