Abstract
We show statistical evidence that pension fund withdrawals and the Emergency Family Income (EFI) increased the likelihood that a laid off construction worker would reject a proposal for a formal employment contract. This favors the hypothesis that pension fund withdrawals and government subsidies related to the health crisis have, to some extent, contributed to the shortage of formal labor in the construction sector. Based on estimations of the logit model, we found that rejection probability increased with work experience (approximated by the worker’s age). For example, the probability of not accepting a formal contract for a highly experienced worker, who withdrew funds from their mandatory private Pension Fund Administrator and received the EFI, increased by 28%. The figure is approximately 2.5 times the rejection probability of a worker with the same experience but without having received this additional income.
Highlights
As in other countries, the COVID-19 pandemic has produced a great social, political and economic impact in Chile’s dense urban areas (Asahi et al 2021; Bennett 2021)
Based on estimations by the logit model, we found that the rejection probability increased with work experience
72% of respondents were aged 30 to 59. This is consistent with the years of experience considered in the present work and in the Construction Workers Characterization Report (Cámara Chilena de la Construcción 2019)
Summary
The COVID-19 pandemic has produced a great social, political and economic impact in Chile’s dense urban areas (Asahi et al 2021; Bennett 2021). Records of the National Statistics Institute (Instituto Nacional de Estadísticas 2021) revealed that in 2020 more than one million jobs were destroyed nationally because of the pandemic, averaging an unemployment rate close to 11%. The impact of COVID-19 on unemployment is important for the advancement of aid at the regional and national level for social protection and economic stimulus policies. In this context, the government implemented the universal EFI in 2021, covering more families with monetary contributions to cushion the economic and social impact new confinement measures would cause
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