More info on the “informal” labor market in Argentina
In an amazing effort on my part (go me!), I downloaded each and everyone of the population surveys for Argentina (Q3 2003 to Q4 2012). I calculated for each quarter several indicators, which I’ll start posting from now on.
One of the easiest things I did (which is not saying much) is in line with my previous post, about the minimum wage. I calculated the share of employees working illegally. Although surveys do not ask “Do you work illegally?” because the most likely answer would be “Uh, what? me, no! nevah!” they go around and ask things like “do you have health insurance in this job you have, do you have paid holidays, do you get a bonus at the end of the year, can you take days off if you’re sick?” all which are constitutional rights. So if they say no, they’re most likely working illegally.
A second thing to calculate was the median hourly wage. What I’m interested now its not its absolute value, but its value relative to the minimum wage.
Finally, I calculated the share of people making less than minimum wage. And finally, I put it all in the same graph!:
Mixed signals for this graph. As the minimum/median wage ratio increases, so does the share of people who make minimum wage, which means that the minimum wage is useless in some way. In the same way, as the ratio decreases, the percentage of people making less than minimum wage decreases.
If we continue on the argument that the minimum wage is useless, then the share of informal workers should rise as the minimum wage increases relative to the normal wage. But this doesn’t happen. The share of informal workers is oblivious to the evolution of the minimum wage: it falls steadily up to 2008 and then stagnate around 30%.
Does this make sense? Yeah, I think that what’s going on is that there are other ways of paying people less than minimum wage: you tell the IRS that they have worked less hours than they are actually working. Informality I think has more to do with sparing the employer health insurance and social security payments than avoiding the minimum wage.