Labor Market Rigidities and Informality in Colombia
AbstractInformality is at the center of the economic debate in Colombia, fueled by the high level prevalent in the country and its substantial increase during the 1990s. We study the effect of labor market rigidities, namely the increase in non-wage costs and the minimum wage on the size of the informal sector, the transition into and out of informality, and wages. Our results indicate that rises in non-wage costs and the minimum wage, increase the probability of transition into informality as well as the size of the informal sector. The analysis of these effects along the income distribution points towards strong exclusion motives for low skilled informal workers, mainly driven by labor demand adjustments in response to increasing hiring costs; and argues somehow in favor of exit motives for workers at the top of the wage distribution. Furthermore, there is strong indexation of salaries to the minimum wage, except for low skilled informal workers. In addition, firms adjust salaries in response to increasing non-wage costs for all workers within the labor force.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 006717.
Date of creation: 31 Jan 2010
Date of revision:
Contact details of provider:
Other versions of this item:
- Camilo Mondragón-Vélez & Ximena Peña & Daniel Wills, 2010. "Labor Market Rigidities and Informality in Colombia," Journal of LACEA Economia, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- NEP-ALL-2010-03-06 (All new papers)
- NEP-DEV-2010-03-06 (Development)
- NEP-LAB-2010-03-06 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maloney, William F. & Nunez, Jairo & Cunningham, Wendy & Fiess, Norbert & Montenegro, Claudio & Murrugarra, Edmundo & Santamaria,Mauricio & Sepulveda, Claudia, 2001.
"Measuring the impact of minimum wages : evidence from Latin America,"
Policy Research Working Paper Series
2597, The World Bank.
- William Maloney & Jairo Mendez, 2004. "Measuring the Impact of Minimum Wages. Evidence from Latin America," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 109-130 National Bureau of Economic Research, Inc.
- William F. Maloney & Jairo Nunez Mendez, 2003. "Measuring the Impact of Minimum Wages: Evidence from Latin America," NBER Working Papers 9800, National Bureau of Economic Research, Inc.
- Maloney, William F., 2004.
Elsevier, vol. 32(7), pages 1159-1178, July.
- Ximena Peña Parga & Camilo Mondragón-Vélez, 2008.
"Business Ownership and Self-Employment in Developing Economies: The Colombian Case,"
004672, UNIVERSIDAD DE LOS ANDES-CEDE.
- Camilo Mondragón-Vélez & Ximena Peña, 2010. "Business Ownership and Self-Employment in Developing Economies: The Colombian Case," NBER Chapters, in: International Differences in Entrepreneurship, pages 89-127 National Bureau of Economic Research, Inc.
- Fortin, Bernard & Marceau, Nicolas & Savard, Luc, 1997. "Taxation, wage controls and the informal sector," Journal of Public Economics, Elsevier, vol. 66(2), pages 293-312, November.
- Daniel Mejía & carlos Esteban Posada, .
"Informalidad: teoría e implicaciones de política,"
Borradores de Economia
455, Banco de la Republica de Colombia.
- Bernal Raquel, 2009. "The Informal Labor Market in Colombia: identification and characterization," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
- Josh Lerner & Antoinette Schoar, 2010. "International Differences in Entrepreneurship," NBER Books, National Bureau of Economic Research, Inc, number lern08-2.
- Michael J. Pisani & JosÃ© A. Pag�n, 2004. "Self-employment in the era of the new economic model in Latin America: a case study from Nicaragua," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 16(4), pages 335-350, July.
- Kristensen, Nicolai & Cunningham, Wendy, 2006. "Do minimum wages in Latin America and the Caribbean matter ? Evidence from 19 countries," Policy Research Working Paper Series 3870, The World Bank.
- Paula Herrera & Enrique López-Bazo & Elisabet Motellón, 2013.
"“Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour market”,"
IREA Working Papers
201307, University of Barcelona, Research Institute of Applied Economics, revised May 2013.
- Paula Herrera & Enrique López-Bazo & Elisabet Motellón, 2013. "“Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour market”," AQR Working Papers 201304, University of Barcelona, Regional Quantitative Analysis Group, revised May 2013.
- Cosar, A. Kerem & Guner, Nezih & Tybout, James, 2013.
"Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy,"
IZA Discussion Papers
7718, Institute for the Study of Labor (IZA).
- A. Kerem Cosar & Nezih Guner & James Tybout, 2013. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," Working Papers 732, Barcelona Graduate School of Economics.
- A. Kerem Coşar & Nezih Guner & James Tybout, 2010. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," NBER Working Papers 16326, National Bureau of Economic Research, Inc.
- Nezih Guner & James Tybout & A. Kerem Cosar, 2009. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," 2009 Meeting Papers 811, Society for Economic Dynamics.
- A. Kerem Coşar & Nezih Guner & James Tybout, 2011. "Firm dynamics, job turnover, and wage distributions in an open economy," Working Papers 2011-06, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Luis Armando Galvis, 2012.
"Informalidad laboral en las áreas urbanas de Colombia,"
DOCUMENTOS DE TRABAJO SOBRE ECONOMÃA REGIONAL
009364, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
- Luis Armando Galvis A., 2012. "Informalidad laboral en las áreas urbanas de Colombia," COYUNTURA ECONÓMICA, FEDESARROLLO.
- Guataquí R., Juan Carlos & García S., Andrés Felipe & Rodríguez A., Mauricio, 2010.
"El Perfil de la Informalidad Laboral en Colombia,"
PERFIL DE COYUNTURA ECONÓMICA,
UNIVERSIDAD DE ANTIOQUIA - CIE.
- Edgar Vicente Marcillo Yépez, 2011. "¿Existe Alguna Relación Entre La Informalidad Laboral Y La," DOCUMENTOS DE TRABAJO-CIDSE 007931, UNIVERSIDAD DEL VALLE - CIDSE.
- Isabelle Joumard & Juliana Londoño Vélez, 2013. "Income Inequality and Poverty in Colombia - Part 1. The Role of the Labour Market," OECD Economics Department Working Papers 1036, OECD Publishing.
- Adriana Kugler, 2011. "Is there an Anti-labor Bias of Taxes? A Survey of the Evidence from Latin America and Around the World," Research Department Publications 4746, Inter-American Development Bank, Research Department.
- Peña, Ximena, 2013. "The formal and informal sectors in Colombia : country case study on labour market segmentation," ILO Working Papers 482088, International Labour Organization.
- Gustavo Adolfo HERNANDEZ DIAZ, 2011. "Impuestos parafiscales y mercado laboral: Un análisis de Equilibrio General Computable," ARCHIVOS DE ECONOMÃA 008954, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (UNIVERSIDAD DE LOS ANDES-CEDE).
If references are entirely missing, you can add them using this form.