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 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

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%)

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

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Rates in the Informal Sector than do Working Men Source: Cunningham (2004) Gender and Labor Market Outcomes unpublished.

While Men Dominate the Informal Sector, women are disproportionately in the Informal Sector Share of LF that is female Share of the informal sector that is female Argentina34%35% Brazil36%39% Chile34%47% Mexico33% Nicaragua36%43% Paraguay30%40% Source: Cunningham (2001) Sectoral Allocation by Gender PRWP # 2742 (World Bank)

… and this tendency has changed (inconsistently) over time ArgentinaBrazilCosta Rica Self- employed --- Informal sector --- Source: Cunningham (2001) Sectoral Allocation by Gender PRWP # 2742 (World Bank) The change of the share of womens employment in each sector, over the period indicates that the changes is not statistically significant

Message 2: Disaggregating the General Trends is Important

Womens 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 % of LF, by sex, in each sub-sector Source: Cunningham (2004) Gender and Labor Market Outcomes unpublished.

... Though this Greatly Depends on Womens Family Status Source: Cunningham (2000) Breadwinner v. Caregiver in The Economics of Gender in Mexico (World Bank)

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

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 dont like women Statistical – some women are costly, so formal sector employers dont 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...

Demand: Discrimination Employer perceptions of Male and Female workers in the Mexican Tourism Sector (in order of most cited) MenWomen Positive Greater work experience Greater physical strength Foreign language skills ability to work overtime Docility Reliability Punctuality Flexibility (additional tasks) Negative Drunkenness on the job Greater absenteeism (drinking) Trouble-making (union activity) Dishonest Temperamental Greater absenteeism (family /pregnancy) Unable to work overtime Lack of education/experience Source: Chant (1991) Women and Survival in Mexican Cities (Manchester University Press)

Demand: Statistical Discrimination Cost of Maternity Leave Source:

Supply: Balance home work and market work Self-employedInformal employees M (62%)F (51%)M (28%)F (28%) Happy in current job65%41%68%65% Household chores0.2%31%0.05%12.6% Time for other activities3%7%5%6% 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 Weekly hours dedicated to care of the home, by role in hh

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.

Supply: Safety net for the hh Enter LMEnter formal Enter s-e Enter informal salaried ArgentinaYesNoYes MexicoYesNoYes OECDNo--- And Argentine working-class women tell us: Easier for women than men to find employment – identity Womens 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) When the economy is in crisis, the wife:

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