Sectoral Transitions Between Formal Wage Jobs in Chile

Produced by: 
Banco Central de Chile
Available from: 
August 2019
Paper author(s): 
Rosario Aldunate
Gabriela Contreras
Matías Tapia

We use matched employer-employee data from the Chilean Internal Revenue Service to analyze the frequency of formal employment transitions within and between-sectors, the duration of these spells, and their implied wage changes, distinguishing by exit sector and the gender and age of workers. We find a significant degree of aggregate labor mobility between sectors in the Chilean formal labor market, although this average hides significant heterogeneity between workers who change jobs frequently and those with more stable career paths. In addition, conditional on changing jobs, the probability of moving within the same sector is roughly the same as switching sectors. Transitions between formal jobs are associated with wage gains, which appear to be increasing in the length of the transition process. While on average wage gains are larger for workers who move to a new sector, there is significant heterogeneity across sectors. Furthermore, wage costs vary with the age and gender of workers. Our results reveal that, for a large group of workers, transitions between sectors do not seem to entail a significant cost in terms of wages. While this could suggest that the Chilean economy adjusts well to changes in relative prices, it is also consistent with a low accumulation of sector-specific human capital.


Research section: 
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