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The Unemployment Subsidy Program in Colombia: An Assessment

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  • Carlos Medina
  • Jairo Núñez
  • Jorge Andrés Tamayo

Abstract

We assess the effects of the Colombian Unemployment Subsidy (US) program on future labor participation, unemployment, formality, school attendance and earnings of its beneficiaries, on household earnings and school attendance of the household members, and on weight and height of their children at birth. In addition to providing benefits, the program also provides training to some recipients. We use regression discontinuity and matching differences-in-differences estimators and find that both approaches indicate that participation in the labor market, the earnings of beneficiaries, and household income, do not increase, and for some populations decrease during the 18 months after leaving from the Unemployment Subsidy program. Enrollment in formal health insurance falls. The effects on male household heads include larger reductions in their earnings, larger decreases in their labor participation, and greater increases in their unemployment rates. We also find a small though statistically significant positive effect of the program on school attendance of the beneficiaries, but none on their children´s weight or height at birth. The results also are sensitive to the type of training that beneficiaries receive in the Unemployment Subsidy program. Overall, the program serves as a mechanism for smoothing consumption and providing social assistance rather than as a mechanism for promoting a more efficient labor market.

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  • Carlos Medina & Jairo Núñez & Jorge Andrés Tamayo, 2013. "The Unemployment Subsidy Program in Colombia: An Assessment," BORRADORES DE ECONOMIA 010393, BANCO DE LA REPÚBLICA.
  • Handle: RePEc:col:000094:010393
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    Cited by:

    1. Tamayo, Jorge Andrés & Núñez, Jairo & Medina, Carlos, 2013. "The Unemployment Subsidy Program in Colombia: An Assessment," IDB Publications (Working Papers) 4622, Inter-American Development Bank.
    2. Orazio Attanasio & Arlen Guarín & Carlos Medina & Costas Meghir, 2017. "Vocational Training for Disadvantaged Youth in Colombia: A Long-Term Follow-Up," American Economic Journal: Applied Economics, American Economic Association, vol. 9(2), pages 131-143, April.
    3. Linares Sánchez, Jose, 2020. "Efectos de las prestaciones por desempleo del Mecanismo de Protección al Cesante sobre la probabilidad de ocuparse en la formalidad y sobre la calidad de los emparejamientos [Effects of unemploymen," MPRA Paper 106698, University Library of Munich, Germany.
    4. A. Kerem Co?ar & Nezih Guner & James Tybout, 2016. "Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy," American Economic Review, American Economic Association, vol. 106(3), pages 625-663, March.
    5. Finkelstein-Shapiro, Alan & Sarzosa, Miguel, 2018. "Unemployement Protection for Informal Workers in Latin America and the Caribbean," IDB Publications (Working Papers) 4542, Inter-American Development Bank.
    6. Marjorie Chinen & Thomas de Hoop & Lorena Alcázar & María Balarin & Josh Sennett, 2017. "Vocational and business training to improve women's labour market outcomes in low‐ and middle‐income countries: a systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 13(1), pages 1-195.
    7. Orazio Attanasio & Arlen Guarín & Carlos Medina & Costas Meghir, 2015. "Long Term Impacts of Vouchers for Vocational Training: Experimental Evidence for Colombia," BORRADORES DE ECONOMIA 013326, BANCO DE LA REPÚBLICA.
    8. 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.
    9. -, 2016. "Protección y formación: instituciones para mejorar la inserción laboral en América Latina y Asia," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 140 edited by Cepal, September.
    10. Óscar Hernán Munoz Goyes & Jéssica Natalia Páez Cortés, 2014. "Efectos en el mercado de trabajo como consecuencia de la aplicación de choques específicos en la producción del sector cafetero, 2014-2020," Revista IB 012991, Departamento Administrativo Nacional de Estadística - DANE.
    11. Pignatti Clemente & Van Belle Eva, 2021. "Better together: Active and passive labor market policies in developed and developing economies," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-27, January.
    12. Moreno-Monroy, Ana I. & Posada, Héctor M., 2018. "The effect of commuting costs and transport subsidies on informality rates," Journal of Development Economics, Elsevier, vol. 130(C), pages 99-112.
    13. Lina Cardona‐Sosa & Luz Adriana Flórez & Leonardo Fabio Morales & Banco de la República, 2018. "How does the Household Labour Supply Respond to the Unemployment of the Household Head?," LABOUR, CEIS, vol. 32(4), pages 174-212, December.

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    More about this item

    Keywords

    Unemployment; Unemployment Insurance; Labor Supply.;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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