Labor Market Rigidities and Informality in Colombia
Informality 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 business cycle has second order effects. The analysis across education groups 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 with higher educational attainment. In addition, we document facts regarding the evolution and characteristics of the informal sector across alternative definitions of informality.
Volume (Year): Volume 11 Number 1 (2010)
Issue (Month): Fall 2010 (August)
|Contact details of provider:|| |
References listed on IDEAS
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.:
- 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, "undated".
"Informalidad: teoría e implicaciones de política,"
Borradores de Economia
455, Banco de la Republica de Colombia.
- Josh Lerner & Antoinette Schoar, 2010. "International Differences in Entrepreneurship," NBER Books, National Bureau of Economic Research, Inc, number lern08-2.
- William Maloney & Jairo Mendez, 2004.
"Measuring the Impact of Minimum Wages. Evidence from Latin America,"
in: Law and Employment: Lessons from Latin America and the Caribbean, pages 109-130
National Bureau of Economic Research, Inc.
- 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 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.
- Michael J. Pisani & JosÃ© A. Pagán, 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.
- 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.
- Wendy Cunningham, 2007. "Minimum Wages and Social Policy : Lessons from Developing Countries," World Bank Publications, The World Bank, number 6760.
- Bernal Raquel, 2009. "The Informal Labor Market in Colombia: identification and characterization," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, September.
- Maloney, William F., 2004.
Elsevier, vol. 32(7), pages 1159-1178, 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.
When requesting a correction, please mention this item's handle: RePEc:col:000425:008355. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roberto Bernal)
If references are entirely missing, you can add them using this form.