Abstract

The gig economy has transformed global labor markets, yet its dynamics in emerging economies, where informal labor is prevalent, still need to be explored. Furthermore, there is limited knowledge of how gig work interacts with traditional employment sectors and unemployment. This article analyzes the transitions between gig work, traditional employment, and unemployment in Chile, an emerging economy with significant informal employment. Using longitudinal data from Chile's National Employment Survey from 2021q1 to 2024q1, we use probit models to analyze transition probabilities between these three states. We find gig jobs generally serve as transitional roles rather than long-term employment solutions, with substantial turnover and frequent shifts to traditional employment. Individuals in part-time roles or working for smaller companies are more likely to transition into gig employment, whereas those in more stable jobs are less inclined to shift. Additionally, those in informal jobs tend to enter and remain in the gig economy. The study also shows that individuals with higher education are more drawn to gig work, indicating a labor market segmentation that could deepen income inequalities. These insights highlight the dual role of the gig economy in providing temporary relief from unemployment and informality while presenting challenges of stability and long-term job security. Finally, we situate our findings within the existing literature and discuss the broader implications for labor regulation in Chile and similar contexts.