Democracy and Labor Market Outsiders: The Political Consequences of Economic Informality

This dissertation addresses the effect of informality on three key dimensions: social policy

preferences, partisan attachments, and citizen-politician linkages. Many Latin American

labor markets have large informal sectors where workers are not covered by formal labor

arrangements and earn meager wages, as well as truncated social security systems that

target benefits to the well-off at the expense of the poor.

I first analyze how economic informality conditions voters preferences regarding the redistributive role of the state (Chapter 3). I examine the effect of labor informality on individual preferences over contribution-based programs (such as social security and public health insurance) and means-tested programs (such as CCTs). The analysis of micro-level data for both Latin America and Mexico suggests that, counterintuitively, voters in the informal sector are no more likely to support increased spending in social security and welfare institutions. On the contrary, labor market outsiders tend to favor only social programs with no eligibility requirements.

In the second part of the project, I study patterns of party identication among citizens

in the informal sector (Chapter 4). I argue that the low utility derived from social policies

and the obstacles to class identity formation contribute to depress partisan attachments.

The findings indicate that economic informality weakens ideological attachments between

voters and political parties. Results also show that outsiders trust less in political parties.

Finally, I analyze how economic informality conditions linkages between citizens and

politicians (Chapter 5). I theorize that given the characteristics of the members in the

informal sector, political parties will have incentives to approach them using

clientelistic offers and vote-buying strategies. I find that voters in the informal sector are particularly sensitive to some types of clientelistic offers. Furthermore, labor market outsiders seem to be more likely to switch their vote toward candidates offering private benefits.