Labor market transformations: outsourcing and workers' income effects
Labor Regulation, Outsourcing, Labor Reform, Informality, Outsourcing, Entrepreneurship, Formalization
This work comprises two studies examining outsourcing and labor market trends. The first study analyzes the impacts of Brazil’s 2017 labor reform and outsourcing laws on employment patterns, highlighting a shift from formal employment to flexible independent work structures, such as Individual Microenterprises. The findings reveal that the reforms accelerated the growth of individual businesses, with heterogeneous effects of labor deregulation across industries and regions. The second study aims to uncover the economic drivers behind labor outsourcing and worker registration as individual entrepreneurs, as well as the financial implications of this transition for different worker profiles. The findings reveal that informal and younger formal workers show positive trends in financial activity indicators post-transition to entrepreneurship, such as increased credit balances, while older formal workers face significant and persistent financial losses. Across all groups, rising default rates highlight challenges in sustaining financial benefits, calling for targeted measures like financial support and education, as well as accessible and well-designed pension programs.