Converging Divergences in Formal and Informal Work: Longitudinal Evidence from Mexico

Abstract

Analyses of neoliberal labor market restructuring debate whether neoliberalism is homogenizing jobs or polarizing them. Analyses of informal employment debate whether such employment is inferior, and if so, if it is typically a transition or a trap. This paper speaks to both debates, using a three time-point (2006, 2007, 2008) longitudinal survey of retail workers in the state of Tlaxcala, Mexico, to contrast workers' experiences across the spectrum of formal and informal work. Using the longitudinal data, the paper compares workers' trajectories, exploring how they make choices and navigate transitions between more formal and more informal work. A qualitative portion of the survey permits the comparison of people's aspirations and insight into how those aspirations shift overtime.

Differences within formal and informal retail sectors loom as large as differences between the two sectors. For example, while formal retail workers earned more and in most cases have greater earnings growth than informal ones, much of the earnings advantage disappears when we excluded formal retail supervisors and managers and focus on rank-and-file workers. Class and gender, in addition to market position, structure differential access to better outcomes. Transitions between formal and informal work are rare in this sample, and progress toward aspirations are very limited for most subgroups. The expansion of retail chains appears to be degrading job quality among informal retail workers (through heightened competition), but without leading to better jobs for the typical employee in the chains. In addition, large numbers of job-seekers without viable alternatives are entering informal retail, once more degrading job quality through added competition.