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Income Inequality and Poverty in Colombia - Part 1. The Role of the Labour Market

  • Isabelle Joumard
  • Juliana Londoño Vélez

Income inequality in Colombia has declined since the early 2000s but remains very high by international standards. Income dispersion largely originates from the labour market, which is characterised by a still high unemployment rate, a pervasive informal sector and a wide wage dispersion reflecting a large education premium for those with higher education. Reducing income inequality is a key government objective and this requires improving the performance of the labour market. Raising educational outcomes for all and enhancing training programmes would help improve labour supply and productivity. Formal job creation however remains heavily constrained by restrictive labour market regulations, in particular very substantial non-wage labour costs and a minimum wage which is high compared to average incomes. The 2012 tax reform reduces non-wage labour costs but more decisive steps are needed to create the right conditions and incentives to boost formal employment. Inégalités de revenu et pauvreté en Colombie - Partie 1. Le role du marché de travail Les inégalités de revenu se sont atténuées depuis le début des années 2000 mais elles restent beaucoup plus fortes que dans la plupart des autres pays. La situation sur le marché du travail explique dans une large mesure ces inégalités, avec un taux de chômage qui reste élevé, un vaste secteur informel et d'amples écarts de salaires révélant un très net avantage pour ceux qui ont fait des études supérieures. La réduction des inégalités de revenu est un objectif important du gouvernement. Pour l'atteindre, il est nécessaire d'améliorer les performances du marché du travail. Réformer le système éducatif pour garantir un meilleur niveau de connaissances pour tous et améliorer la formation professionnelle contribueraient à améliorer l'offre de main d'oeuvre et la productivité. La création d'emplois dans le secteur formel reste néanmoins fortement entravée par des réglementations du travail restrictives, en particulier des coûts non-salariaux particulièrement importants et un salaire minimum qui est élevé par rapport aux revenus moyens. La réforme fiscale de 2012 réduit les coûts non-salariaux mais des mesures plus ambitieuses sont nécessaires pour créer des conditions and incitations plus favorables à la création d'emplois dans le secteur formel.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 1036.

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Date of creation: 27 Mar 2013
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Handle: RePEc:oec:ecoaaa:1036-en
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