Efecto de la flexibilidad laboral sobre el empleo formal en Ecuador: un análisis econométrico de datos de panel para las provincias, 2016-2023.

Abstract

The study examines the relationship between contractual flexibility and formal employment across Ecuadorian provinces from 2016 to 2023, while also considering informality as a complementary labor-market outcome. The analysis accounts for differences in provincial economic activity and changes in labor-market conditions over time. Microdata from the National Survey of Employment, Unemployment, and Underemployment (ENEMDU) were combined with provincial Gross Value Added (GVA) data from the Central Bank of Ecuador, while contract duration was used as a proxy for labor flexibility. The empirical analysis relies on Pooled Logit and Random Effects Logit models, with the latter incorporating province-level heterogeneity through a random intercept. Results from the likelihood ratio test favored the random-effects specification for both formal and informal employment, suggesting that differences across provinces play a significant role in explaining labor-market outcomes. Contrary to our initial hypotheses, the results show that greater contractual flexibility is positively related to informality and negatively related to formality. On the other hand, greater economic change at the provincial level is associated with higher levels of formality and a reduction in informality. These findings, taken together, suggest that the proliferation of temporary contracts does not, in itself, translate into better integration into the formal sector. Finally, it is important to emphasize that these estimates reflect a statistical bias due to the study variables and should therefore not be interpreted as causal relationships.