This paper examines the effect of the 2010 earthquake on the labour market in the Bío Bío region in Chile and suggests various public policies that could be considered for the future that would better equip the country for dealing with emergency situations in the areas of social and labour policy. The before the earthquake, the labour market of the Bío Bío region was underperforming compared to the rest of the country. The data gathered immediately after the earthquake show that its main form of adjustment to the crisis was the retreat of workers into inactivity. This paper examines this development in more detail and identifies which particular groups of workers were most affected by the crisis. Our analysis highlights the fact that Chile does not have an institutionalized system of public policies designed to counteract the effects of a shock of this magnitude, which could have been attenuated by policies that guarantee universal rights and benefits. We also discuss the potential role of industrial policy in the regions so affected in the medium and long-term by the earthquake.
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