The Determinants of Labour Force Participation and Employment in Chile

Chile’s labour force participation is low in comparison with Organization for Economic Co-operation and Development (OECD) and Latin American countries on average, especially among females and youths. This article estimates the main determinants of labour supply and employment for prime-age individuals and youths using data from the National Household Survey (CASEN) for 1990, 1996 and 2003. Educational attainment is found to be a powerful predictor of labour supply and employability for both males and females. The number of young children in the household is a strong deterrent to female participation, both for prime-age and young women. Changes in labour supply and employment during 1990 and 2003 are decomposed using the probit estimations. The results suggest that structural changes in the economy were the main determinants of changes in participation among prime-age individuals, but the converse is true for changes in employment, which depended predominantly on shifts in individual characteristics.