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The Unemployment Subsidy Program in Colombia: An Assessment

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Listed author(s):
  • Carlos Medina
  • Jairo Nunez
  • Jorge Andres Tamayo

Abstract

This paper assesses the effects of the Colombian Unemployment Subsidy (US), which includes benefits as well as training for some recipients. Using regression discontinuity and matching differences-in-differences estimators, the study finds that participation in the labor market, earnings of beneficiaries, and household income do not increase, and for some populations decrease during the 18 months after leaving the US program. Enrollment in formal health insurance falls. Effects on male heads of household include reductions in their earnings, decreases in their labor participation, and increases in their unemployment rates. The study also finds a small though statistically significant positive effect on beneficiaries' school attendance, but none on their children's weight or height at birth. The results are sensitive to the type of training that beneficiaries receive. Overall, the program serves more as a mechanism for smoothing consumption and providing social assistance than for increasing labor market efficiency.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number IDB-WP-369.

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Date of creation: May 2013
Handle: RePEc:idb:wpaper:idb-wp-369
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Find related papers by JEL classification:
  • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
  • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
  • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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Cited by:

  1. Jorge Andrés Tamayo & Jairo Núñez & Carlos Medina, 2013. "The Unemployment Subsidy Program in Colombia: An Assessment," IDB Publications (Working Papers) 82158, Inter-American Development Bank.
  2. 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.
  3. 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.
  4. Leonardo Fabio Morales & Carlos Medina, 2016. "Assessing the Effect of Payroll Taxes on Formal Employment: The Case of the 2012 Tax Reform in Colombia," Borradores de Economia 971, Banco de la Republica de Colombia.
  5. -, 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.
  6. Verónica Alaimo & Mariano Bosch & David S. Kaplan & Carmen Pagés & Laura Ripani, 2015. "Jobs for Growth," IDB Publications (Books), Inter-American Development Bank, number 90977, February.

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