Nonstandard Employment and Labour Market Inequalities: The Case of Portugal

This dissertation aims at contributing to the debate on the changing nature of work in Portugal, using a multidimensional approach to answer our central question: how does nonstandard employment relate to inequality? We carry out a literature review on nonstandard employment and an empirical analysis of the Portuguese labour market. The former investigates the main determinants of nonstandard employment and its potential benefits and risks for society in general. Using the Eurostat database and the Portuguese micro database of wages “Quadros de Pessoal”, the latter seeks to ascertain the evolution of nonstandard employment according to workers’ characteristics and how it relates to labour market inequalities in terms of opportunities and outcomes. In this respect, we study the relationship between nonstandard employment and activity rates and differences in labour market transitions between standard and nonstandard workers to understand whether nonstandard employment can create sustainable opportunities in the labour market. Regarding outcomes, we detail the earnings inequality between standard and nonstandard workers. We estimate and compare the earnings distribution and median earnings by type of worker, analyse the in-work-at-risk-of-poverty rate, and estimate the standard workers’ wage premium (controlling for individual and job characteristics). Moreover, our results indicate that nonstandard employment has resulted in a segmented labour market in Portugal. One could argue that nonstandard employment can provide new opportunities for specific socioeconomic groups. However, most of it followed a cyclical pattern, offered worse labour market transitions, and many nonstandard workers were involuntary. Also, we show that nonstandard workers are more likely to be worse off along the earnings distribution, have lower and more volatile earnings, face in-work poverty, and bear a wage penalty relative to standard workers. In this scenario, we discuss the role that labour market institutions need to play to mitigate these inequalities and ensure nonstandard employment accomplishes its goals. The concern should be to allow workers to freely choose their career paths, providing decent work for all.