IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v78y2011i2p476-501.html
   My bibliography  Save this article

The Effect of Social Security Contributions on Coverage and Wages: A Gender Perspective Using a Natural Experiment from Colombia

Author

Listed:
  • Andres J. Vargas

Abstract

This article investigates, from a gender and marital status perspective, the effects of pension and health care contributions on the employment and wages of workers covered by social security regulations. To do this, I use as a natural experiment a reform implemented in Colombia during the mid‐1990. In particular I employ a differences‐in‐differences estimation based on an endogenous switching‐regression model that accounts for self‐selection into coverage. My results indicate that, for females, a 10% increase in contributions reduces the relative wages of covered workers by 7.2%. On the other hand, for males, the reform increases the relative wages of covered workers by 7.1%. Among females, the effect is predominantly present in single women. Among men, divorced and widowed workers are the only group not to experience an effect on earnings. For most family groups, the social security reform has no significant effect on coverage.

Suggested Citation

  • Andres J. Vargas, 2011. "The Effect of Social Security Contributions on Coverage and Wages: A Gender Perspective Using a Natural Experiment from Colombia," Southern Economic Journal, John Wiley & Sons, vol. 78(2), pages 476-501, October.
  • Handle: RePEc:wly:soecon:v:78:y:2011:i:2:p:476-501
    DOI: 10.4284/0038-4038-78.2.476
    as

    Download full text from publisher

    File URL: https://doi.org/10.4284/0038-4038-78.2.476
    Download Restriction: no

    File URL: https://libkey.io/10.4284/0038-4038-78.2.476?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Grazier, S. & Sloane, P.J., 2008. "Accident risk, gender, family status and occupational choice in the UK," Labour Economics, Elsevier, vol. 15(5), pages 938-957, October.
    2. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1, January.
    3. Hersch, Joni, 1998. "Compensating Differentials for Gender-Specific Job Injury Risks," American Economic Review, American Economic Association, vol. 88(3), pages 598-627, June.
    4. Thomas DeLeire & Helen Levy, 2004. "Worker Sorting and the Risk of Death on the Job," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 925-954, October.
    5. Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
    6. Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters, in: Tax Policy and the Economy, Volume 5, pages 111-144, National Bureau of Economic Research, Inc.
    7. Adriana Kugler & Maurice Kugler, 2009. "Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 335-358, January.
    8. Fellner, Gerlinde & Maciejovsky, Boris, 2007. "Risk attitude and market behavior: Evidence from experimental asset markets," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 338-350, June.
    9. Michael Lokshin & Zurab Sajaia, 2004. "Maximum likelihood estimation of endogenous switching regression models," Stata Journal, StataCorp LP, vol. 4(3), pages 282-289, September.
    10. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-630, October.
    11. Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
    12. James J. Heckman & Carmen Pagés, 2004. "Introduction to "Law and Employment: Lessons from Latin American and the Caribbean"," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 1-108, National Bureau of Economic Research, Inc.
    13. Guillermo Mondino & Silvia Montoya, 2000. "The Effects of Labor Market Regulations on Employment Decisions by Firms: Empirical Evidence for Argentina," IDB Publications (Working Papers) 43040, Inter-American Development Bank.
    14. James, Estelle & Edwards, Alejandra Cox & Wong, Rebecca, 2003. "The gender impact of pension reform : a cross-country analysis," Policy Research Working Paper Series 3074, The World Bank.
    15. Loayza, Norman V. & Rigolini, Jamele, 2006. "Informality trends and cycles," Policy Research Working Paper Series 4078, The World Bank.
    16. Francisco Carneiro, 1997. "The Changing Informal Labour Market in Brazil: Cyclicality versus Excessive Intervention," LABOUR, CEIS, vol. 11(1), pages 3-22, April.
    17. James, Estelle & Edwards, Alejandra Cox & Wong, Rebeca, 2003. "The gender impact of pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 2(2), pages 181-219, July.
    18. Kugler, Adriana D., 2005. "Wage-shifting effects of severance payments savings accounts in Colombia," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 487-500, February.
    19. Dwyer, Peggy D. & Gilkeson, James H. & List, John A., 2002. "Gender differences in revealed risk taking: evidence from mutual fund investors," Economics Letters, Elsevier, vol. 76(2), pages 151-158, July.
    20. Daniel S. Hamermesh, 2004. "Labor Demand in Latin America and the Caribbean. What Does It Tell Us?," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 553-562, National Bureau of Economic Research, Inc.
    21. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-641, June.
    22. James, Estelle & Edwards, Alejandra Cox & Wong, Rebeca, 2008. "The Gender Impact of Social Security Reform," University of Chicago Press Economics Books, University of Chicago Press, number 9780226392004, June.
    23. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-183, May.
    24. 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 - Books, The World Bank Group, number 6730, December.
    25. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adriana Kugler & Maurice Kugler, 2009. "Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia," Economic Development and Cultural Change, University of Chicago Press, vol. 57(2), pages 335-358, January.
    2. María F. Prada & Graciana Rucci & Sergio S. Urzúa, 2015. "The Effect of Mandated Child Care on Female Wages in Chile," NBER Working Papers 21080, National Bureau of Economic Research, Inc.
    3. María F. Prada & Graciana Rucci & Sergio S. Urzúa, 2015. "The Effect of Mandated Child Care on Female Wages in Chile," NBER Working Papers 21080, National Bureau of Economic Research, Inc.
    4. 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.
    5. Leonardo Fabio Morales & Carlos Medina, 2017. "Assessing the Effect of Payroll Taxes on Formal Employment: The Case of the 2012 Tax Reform in Colombia," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2017), pages 75-124, November.
    6. Kim, Jinyoung & Kim, Seonghoon & Koh, Kanghyock, 2022. "Labor market institutions and the incidence of payroll taxation," Journal of Public Economics, Elsevier, vol. 209(C).
    7. Adriana D. Kugler & Maurice D. Kugler & Luis O. Herrera-Prada, 2017. "Do Payroll Tax Breaks Stimulate Formality? Evidence from Colombia’s Reform," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2017), pages 3-40, November.
    8. Rita Almeida & Pedro Carneiro, 2012. "Enforcement of Labor Regulation and Informality," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 64-89, July.
    9. Almeida, Rita & Carneiro, Pedro, 2008. "Mandated benefits, employment, and inequality in a dual economy," Social Protection Discussion Papers and Notes 45051, The World Bank.
    10. Mauricio Santa María S. & Fabián García A. & Ana Virgina Mujica P., 2009. "Los costos no laborales y el mercado laboral : impacto de la reforma de salud en Colombia," Working Papers Series. Documentos de Trabajo 9186, Fedesarrollo.
    11. Bedi, Arjun S. & Shiferaw, Admasu & Söderbom, Måns & Alemu Zewdu, Getnet, 2022. "Social insurance reform and workers’ compensation," Labour Economics, Elsevier, vol. 78(C).
    12. Schultz, T. Paul, 2009. "The Gender and Generational Consequences of the Demographic Transition and Population Policy: An Assessment of the Micro and Macro Linkages," Working Papers 71, Yale University, Department of Economics.
    13. Beatriz Muriel & Carlos Gustavo Machicado, 2012. "Employment and Labor Regulation: Evidence from Manufacturing Firms in Bolivia, 1988-2007," Development Research Working Paper Series 07/2012, Institute for Advanced Development Studies.
    14. Kugler, Adriana & Kugler, Maurice, 2003. "The labor market effects of payroll taxes in a middle-income country: evidence from Colombia," Discussion Paper Series In Economics And Econometrics 0306, Economics Division, School of Social Sciences, University of Southampton.
    15. Echavarría-Soto, Juan José & López, Enrique & Ocampo, Sergio & Rodríguez-Niño, Norberto, 2012. "Choques, instituciones laborales y desempleo en Colombia," Chapters, in: Arango-Thomas, Luis Eduardo & Hamann-Salcedo, Franz Alonso (ed.), El mercado de trabajo en Colombia : hechos, tendencias e instituciones, chapter 18, pages 753-794, Banco de la Republica de Colombia.
    16. Renata Narita, 2020. "Self-Employment in Developing Countries: A Search-Equilibrium Approach," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 1-34, January.
    17. Scherer, C.R., 2015. "Payroll tax reduction in Brazil : Effects on employment and wages," ISS Working Papers - General Series 602, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    18. Thomas Bauer & Regina Riphahn, 2002. "Employment effects of payroll taxes - an empirical test for Germany," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 865-876.
    19. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December.
    20. Cueva, Carlos & Rustichini, Aldo, 2015. "Is financial instability male-driven? Gender and cognitive skills in experimental asset markets," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 330-344.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:78:y:2011:i:2:p:476-501. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.