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Effects of Colombia's Social Protection System on Workers' Choice between Formal and Informal Employment

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  • Adriana Camacho

    ()

  • Emily Conover
  • Alejandro Hoyos

Abstract

We examine whether the Colombian government, when instituting and expanding social programs in the early nineties, inadvertently created incentives for people to become informal. We use data from repeated cross-sections of the Colombian Household Survey for periods before and after implementation of the reforms. As robustness, we also construct a panel of individuals interviewed for the first and second Census of the Poor. Using the variation in the onset of interviews across municipalities we find robust and consistent estimates of an increase in informal employment between 2 and 4 percentage points. From a policy perspective this implies that the broad expansion of government provided health insurance in Colombia contributed to increasing informal employment.

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File URL: http://economia.uniandes.edu.co/publicaciones/dcede2009-18.pdf
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Bibliographic Info

Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 006003.

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Length: 36
Date of creation: 02 Aug 2009
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Handle: RePEc:col:000089:006003

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Keywords: Incentives; Informal Sector; Health Insurance; Social Protection; Colombia.;

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  1. Adriana Camacho & Emily Conover, 2011. "Manipulation of Social Program Eligibility," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 41-65, May.
  2. Guillermo E. Perry & William F. Maloney & Omar S. Arias & Pablo Fajnzylber & Andrew D. Mason & Jaime Saavedra-Chanduvi, 2007. "Informality : Exit and Exclusion," World Bank Publications, The World Bank, number 6730, October.
  3. Reyes Aterido & Mary Hallward-Driemeier & Carmen Pagés-Serra, 2011. "Does Expanding Health Insurance Beyond Formal-Sector Workers Encourage Informality?: Measuring the Impact of Mexico's Seguro Popular," IDB Publications 81001, Inter-American Development Bank.
  4. Mauricio Cardenas & Raquel Bernal, 2004. "Determinants of Labor Demand in Colombia. 1976–1996," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 229-272 National Bureau of Economic Research, Inc.
  5. Raymundo M. Campos-Vázquez & Melissa A. Knox, 2010. "Social protection programs and employment: The case of Mexico’s “Seguro Popular” program," Serie documentos de trabajo del Centro de Estudios Económicos, El Colegio de México, Centro de Estudios Económicos 2010-14, El Colegio de México, Centro de Estudios Económicos.
  6. Calderón-Mejía, Valentina & Marinescu, Ioana E., 2012. "The Impact of Colombia's Pension and Health Insurance Systems on Informality," IZA Discussion Papers 6439, Institute for the Study of Labor (IZA).
  7. Grant Miller & Diana Pinto & Marcos Vera-Hernández, 2013. "Risk Protection, Service Use, and Health Outcomes under Colombia's Health Insurance Program for the Poor," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 61-91, October.
  8. Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
  9. Adriana Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," International Tax and Public Finance, Springer, Springer, vol. 6(3), pages 389-410, August.
  10. Marcelo Bérgolo & Guillermo Cruces, 2011. "Labor Informality and the Incentive Effects of Social Security: Evidence from a Health Reform in Uruguay," IDB Publications 62318, Inter-American Development Bank.
  11. Leonardo Gasparini & Francisco Haimovich & Sergio Olivieri, 2007. "Labor Informality Effects of a Poverty-Alleviation Program," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0053, CEDLAS, Universidad Nacional de La Plata.
  12. Sebastian Galiani & Federico Weinschelbaum, 2007. "Modeling Informality Formally: Households and Firms," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0047, CEDLAS, Universidad Nacional de La Plata.
  13. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
  14. Leonardo Gasparini & Francisco Haimovich & Sergio Olivieri, 2009. "Labor informality bias of a poverty-alleviation program in Argentina," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 181-205, November.
  15. Mariano Bosch & Raymundo M. Campos-Vázquez, 2010. "The trade-offs of social assistance programs in the labor market: The case of the “Seguro Popular” program in Mexico," Serie documentos de trabajo del Centro de Estudios Económicos, El Colegio de México, Centro de Estudios Económicos 2010-12, El Colegio de México, Centro de Estudios Económicos.
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  1. Distorsiones del mercado laboral colombiano a causa del diseño del Sistema de Protección Social
    by Adriana Camacho González in Foco Económico on 2011-08-30 12:00:00
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