Dynamics of the formal and informal labour in Brazil: occupational and earnings mobility

The purpose of this paper is to discuss recent dynamics of the Brazilian labour market, by analysing occupational mobility patterns, specially the transitions between formal and informal labour, and verify the earnings mobility resulting from these transitions, separately by gender.

The changes in the mobility patterns are analysed by performing an estimation of the transition probabilities between different occupational status between 2002 and 2012, using a multinomial logit model and the microdata from the Monthly Employment Survey (PME). The earnings mobility is analysed by using quantile regressions.

The results indicate a high degree of mobility from unemployment to formal employment in the period but suggest the persistence of mobility patterns. Women are better off in the period, but only among individuals with better attributes. The earnings mobility results, for women and men, suggest an increase in valuation of the formal labour relatively to informality (informal salaried employment and self-employment), especially at the bottom of the earnings distribution.

The paper contributes to a better understanding of recent changes in occupational mobility patterns between formal and informal labour and the earnings mobility underlying these patterns, accounting for the differences along the earnings distribution and gender issues. That is, it allows identify which groups of workers benefited more from the formalisation process to infer about trends in formal–informal dynamics over the period and discuss the challenges in conducting policies to promote inclusive and quality employment.