The dynamics of disappearing routine jobs in Chile: An analysis of the link between deroutinisation and informality

Abstract

In spite of the growing literature on deroutinisation, little is known about the individual-level patterns underlying the decline of routine jobs and the link with informal employment in middle-income countries. To fill this gap, we analyse the flows of routine workers into and out of formal and informal routine and non-routine occupations over the period 1980–2015 in Chile. Using rich longitudinal data from the Social Protection Survey, we reconstruct individuals’ occupational trajectories by classifying individuals based on their ISCO-88 2-digit level occupations into different states on a monthly basis. We then estimate a series of multilevel competing risk event history models and adopt a decomposition flow approach to study the flows underlying the decline of routine occupations over time. Our findings indicate a process of displacement and occupational downgrading for routine manual workers: workers in routine manual formal employment increasingly become non-employed or use informality as a buffer against job loss, and workers in routine manual informal employment become unemployed or transit to non-routine manual informal occupations. Our decomposition analysis shows that the decline in the share of routine occupations in Chile is mostly accounted for by a decrease in the inflow transition rate from unemployment, coupled with an increase in the outflow transition rates to unemployment. Lastly, we find that, over time, a larger proportion of individuals who were formally employed in RM occupations transit to informal employment after a period of unemployment.