Introduction

Analysing a labour market based on the development of its unemployment rate is as simplistic as assessing a country's level of development based solely on its GDP per capita figures. Yet this is precisely what most labour market analysts do.

This chapter will show how an application of Amartya Sen's capability approach to the Chilean labour market breaks up such a perspective by obliging us to take into account a series of other variables related to the quality of employment that are at least as important to individual wellbeing as having a job in the first place.

Employment is a subject very much neglected by the development literature, even though it is the central factor in an individual's wellbeing once his or her most basic needs have been covered. The capability approach therefore has much to contribute to any debate on the labour markets of developing countries. This chapter uses the results of a survey specifically designed and implemented by the author to create an indicator of the quality of employment, and will demonstrate the uses of such an indicator in order to show how the capability approach can be used as a policy making tool to capture the capabilities and functionings associated with employment far better than other measures such as an unemployment rate.

This chapter also applies the capability approach to a country with a higher level of development than most of the examples that have been used so far to illustrate the approach.