Resumen 

This paper explores labor market inclusion in Chile, using a new household survey representative of the population living in rural-urban territories, that is, small and medium cities with functional linkages to their surrounding rural areas. This particular type of territories are of interest because they are home to about half of the population in Latin America and have a number of distinctive characteristics compared to both larger cities and more isolated rural areas. Indeed, emerging evidence suggests that small and medium cities and rural-urban linkages contribute significantly to growth and poverty reduction, especially via diversification into rural non-farm activities, while agglomeration in metropolitan areas does not. We focus on labor force participation and employment quality of women and young people, two groups with historically low participation in Chile, as indicators of labor market inclusion. Policies for labor market inclusion tend to focus on improving individual assets (including human and social capital). However, the characteristics of the place where people live contribute to defining the structure of opportunities and constraints that people face. If public policy does not take them into account, people-based policies of labor market inclusion may fail to provide sustainable positive results. In this paper we test the hypothesis that place characteristics have a significant influence on labor market inclusion, over and above individual characteristics, and we trace possible mechanisms through which such influence may arise.