In the wake of the COVID-19 pandemic, the socio-economic fabric of labor markets worldwide underwent profound upheaval. Nowhere has this disruption been as stark as in segmented labor markets characterized by stark divisions between formal and informal employment sectors. A recent study focusing on urban workers in Argentina from 2019 to 2023 sheds critical light on how earnings trajectories evolved during this period of economic turbulence, health crisis, and subsequent recovery. Through advanced longitudinal modeling techniques, researchers have unraveled the intricate interplay between labor market segmentation, individual social profiles, and income inequality, providing a nuanced understanding of occupational mobility in environments susceptible to crisis-induced shocks.
The Argentine labor market, typifying the structural dualities of many emerging economies, is especially segmented between formal and informal sectors. This duality manifests in divergent working conditions, social protections, and income stability, which in turn shape workers’ economic trajectories. By employing Latent Growth Curve (LGC) modeling, the study classified nominal earnings changes into three dominant trajectories: downward, stable, and upward. These trajectories are not random fluctuations but reflect deeper structural mechanisms ingrained in the segmented nature of the labor market and the heterogeneity of economic units.
Diving deeper, logistic regression analysis revealed that factors such as sector affiliation, institutional variables, and personal social characteristics—including education level, gender, and age—play pivotal roles in determining workers’ earnings pathways during crisis periods. Informality strongly correlates with downward earnings trajectories, while formality and higher qualifications generally link to stability or incremental income growth. This evidences a process of labor market segmentation reinforcing economic inequalities, where workers’ social and institutional positions condition their mobility and earning potential.
Crucially, the research emphasizes that the pandemic’s impact on labor earnings cannot be viewed simply through a lens of individual misfortune but must be contextualized within entrenched occupational hysteresis. Those in informal employment, lacking social protections, and characterized by low skills faced compounded vulnerabilities. Women, youth, and residents of socially segregated neighborhoods were disproportionately affected, revealing an accumulation of disadvantages that entrenches socio-economic stratification rather than resolving it. This cumulative adversity highlights the limits of current labor institutions in protecting vulnerable populations during systemic crises.
Conversely, workers embedded in formal employment structures enjoyed relatively more stable earnings trajectories. Salaried and non-salaried workers with medium to high educational attainment, primarily males in their middle ages, tended to experience stable or even slightly increasing earnings despite the external shocks of the pandemic. The security embedded in formal institutional frameworks, including affiliation to social security systems, acts as a buffer, enabling resilience amidst economic turbulence. This phenomenon underscores the paramount role of institutional design in mediating labor market outcomes.
These patterns of divergent labor trajectories during crisis periods concretely illustrate segmentation not just as a theoretical construct but as a lived reality with palpable effects on worker welfare. Labor market segmentation, here, solidifies into a structural mechanism exerting regressive pressure on vulnerable groups, deepening income inequality and socioeconomic disparities. Recognizing these dynamics is pivotal for devising policy interventions aimed at enhancing labor market inclusivity and equity.
In a broader context, the study contributes valuable empirical insights to the theoretical debate between dualist and neoclassical models of labor markets. Dualist theories posit that labor markets are fundamentally segmented, necessitating policies that channel resources to the formal sector to curb informality and poverty. Neoclassical perspectives argue for integrated markets wherein productivity differences justify income disparities, thus questioning the efficacy of formal employment promotion. The Argentine case reveals a hybrid reality: while income gaps partially reflect productivity differences, segment boundaries inhibit labor mobility and exacerbate inequality, challenging simplistic policy prescriptions.
This intersection of theory and data foregrounds the complexities of managing labor market transitions in economies marked by high informality. Efforts to liberalize formal sector employment and simultaneously promote informal economic activity may inadvertently entrench polarization, as mobility between segments under segmented conditions might sustain or even amplify poverty and inequality. Policy design, therefore, must be informed by a nuanced understanding of these segmentation mechanisms and their socio-economic repercussions.
The findings from Argentina’s labor market during the COVID-19 crisis have resonant implications for social protection systems. With global trends favoring labor flexibility, precarious employment, and continuous structural adjustment, traditional institutions based on permanent, stable jobs face unprecedented challenges. In segmented labor markets, these challenges are intensified, underscoring the urgency of reimagining social protection frameworks to provide equitable support regardless of a worker’s sector or occupational trajectory.
By capturing the dynamic evolution of earnings trajectories amidst crisis and recovery, this research advances our comprehension of occupational mobility’s role in shaping labor market outcomes over time. The characterization of linear yet divergent transitions elucidates how structural heterogeneity in production and institutions yields distinct socioeconomic pathways for different cohorts. These insights are not merely academic; they furnish policymakers with essential evidence required to craft targeted interventions that reconcile productivity growth with social equity.
Moreover, this work underscores the necessity of integrating social variables such as gender, age, and residential segregation into labor market analyses. These variables operate as critical modifiers of economic trajectories, with marginalized groups facing multifaceted barriers that impede mobility and exacerbate vulnerability. Incorporating these factors into policy frameworks is vital for fostering inclusive labor markets capable of withstanding future systemic shocks.
As the world continues to grapple with the legacy of the COVID-19 pandemic, studies like this highlight the uneven recovery trajectories experienced by urban workers in dual economies. The juxtaposition of downward and upward earning trends reflects deep-rooted systemic characteristics rather than temporary anomalies. Addressing these structural fissures demands robust, evidence-based policymaking designed to dismantle barriers and foster labor market integration.
Finally, this research constitutes a clarion call for sustained scholarly attention to occupational mobility in segmented labor markets. Crises such as pandemics and technological revolutions will likely recur, intensifying the pressures on labor markets worldwide. Only through nuanced, longitudinal analyses that unravel individual-institutional interactions can societies devise resilient frameworks that promote labor quality, social protection, and economic justice in the face of ongoing transformation.
Subject of Research: Occupational mobility, labor market segmentation, earnings trajectories, and income inequality in the context of crisis and recovery.
Article Title: Earnings trajectories during a crisis in a segmented labor market: Argentina (2019–2023).
Article References:
Salvia, A., Poy, S. Earnings trajectories during a crisis in a segmented labor market: Argentina (2019–2023).
Humanit Soc Sci Commun 12, 700 (2025). https://doi.org/10.1057/s41599-025-04968-9
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