Labor Law Violations in Chile

Abstract

This paper is a contribution to the empirical literature on quantification of labor law violation. It takes up the case of a relatively advanced developing country, Chile, which has a high degree of administrative and bureaucratic capacity. Using micro survey data, the paper establishes the basic facts of compliance with four dimensions of labor law: minimum wage, hours worked, having a contract, and having a pension. On average over the period 1990-2009, we find that the laws were violated in at least one of these dimensions for one third of workers. However, there are large and significant variations over time, across laws and by worker and firm characteristics. Simple tabulation followed by econometric analysis shows that compliance rates are lower for women, foreign born, indigenous and less educated workers; in smaller firms; and in agricultural regions. These initial findings frame a rich research agenda on compliance and enforcement of labor law in Chile.