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Effects of Colombia's social protection system on workers'choice between formal and informal employment

Author

Listed:
  • Camacho, Adriana
  • Conover, Emily
  • Hoyos, Alejandro

Abstract

This paper examines whether the Colombian government's expansion of social programs in the early 1990s, particularly the publicly provided health insurance, discouraged formal employment. Using household survey data and variation across municipalities in the onset of interviews for the SISBEN, the instrument used to identify beneficiaries for public health insurance, it shows robust and consistent estimates of an increase in informal employment of approximately 4 percentage points. Similar results are obtained using an alternative dataset, consisting of a panel of individuals interviewed for the first and second SISBEN. The findings suggest that marginal individuals optimized when deciding whether to participate in the formal sector.

Suggested Citation

  • Camacho, Adriana & Conover, Emily & Hoyos, Alejandro, 2013. "Effects of Colombia's social protection system on workers'choice between formal and informal employment," Policy Research Working Paper Series 6564, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6564
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    References listed on IDEAS

    as
    1. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations in Argentina," ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
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    3. Mauricio Cardenas & Raquel Bernal, 2004. "Determinants of Labor Demand in Colombia. 1976-1996," NBER Chapters,in: Law and Employment: Lessons from Latin America and the Caribbean, pages 229-272 National Bureau of Economic Research, Inc.
    4. Mariano Bosch & Raymundo M. Campos-Vázquez, 2010. "The trade-offs of social assistance programs in the labor market: The case of the “Seguro Popular” program in Mexico," Serie documentos de trabajo del Centro de Estudios Económicos 2010-12, El Colegio de México, Centro de Estudios Económicos.
    5. Leonardo Gasparini & Francisco Haimovich & Sergio Olivieri, 2007. "Labor Informality Effects of a Poverty-Alleviation Program," CEDLAS, Working Papers 0053, CEDLAS, Universidad Nacional de La Plata.
    6. Aterido, Reyes & Hallward-Driemeier, Mary & Pages, Carmen, 2011. "Does expanding health insurance beyond formal-sector workers encourage informality ? measuring the impact of Mexico's Seguro Popular," Policy Research Working Paper Series 5785, The World Bank.
    7. Valentina Calderón & Ioana Marinescu, 2011. "The Impact of Colombia's Pension and Health Insurance Systems on Informality," IDB Publications (Working Papers) 62338, Inter-American Development Bank.
    8. 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.
    9. Raymundo M. Campos-Vázquez & Melissa A. Knox, 2013. "Social Protection Programs and Employment: The Case of Mexico's Seguro Popular Program," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 403-448, July-Dece.
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    11. Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Health Monitoring&Evaluation; Labor Markets; Health Systems Development&Reform; Labor Policies; Population Policies;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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