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WEEKLY NEWSLETTER
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Chile
Index
The modernization of labor-market legislation during
the late
1970s played a fundamental role in the subsequent
performance of
the Chilean economy. Included in this modernization were:
reforms
in the labor code that assign individual workers the right
to seek
representation in collective organizations, and a
reduction in the
cost of dismissals. Moreover, the financial reforms in
social
security and health care removed a major tax burden from
the labor
market, as it transformed social security and health care
taxes
into required basic health care programs. In addition, the
reforms
in the financing of education had a tremendous impact on
the
allocation of human resources and resulted in a
significant growth
of privately funded technical training programs
(see Welfare
Institutions and Social Programs
, ch. 2). The financial
aspects of
these reforms directly affected the efficiency of the
labor market.
For example, pension funds became the largest
institutional
investors of the capital market, representing 26.5 percent
of GDP
in 1990
(see Economic
Results of the Pensions Privatization
, this
ch.).
Data as of March 1994
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