IDEAS home Printed from https://ideas.repec.org/a/oup/wbecrv/v28y2014i3p446-466..html
   My bibliography  Save this article

Effects of Colombia's Social Protection System on Workers' Choice between Formal and Informal Employment

Author

Listed:
  • Adriana Camacho
  • Emily Conover
  • Alejandro Hoyos

Abstract

We examine 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, we find robust and consistent estimates of an increase in informal employment of approximately 4 percentage points. We find similar results using an alternative dataset, consisting of a panel of individuals interviewed for the first and second SISBEN. Our findings suggest that marginal individuals optimized when deciding whether to participate in the formal sector.

Suggested Citation

  • Adriana Camacho & Emily Conover & Alejandro Hoyos, 2014. "Effects of Colombia's Social Protection System on Workers' Choice between Formal and Informal Employment," The World Bank Economic Review, World Bank, vol. 28(3), pages 446-466.
    • Handle: RePEc:oup:wbecrv:v:28:y:2014:i:3:p:446-466.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/wber/lht028
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    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.
    2. Calderón, Valentina & Marinescu, Ioana, 2011. "The Impact of Colombia's Pension and Health Insurance Systems on Informality," IDB Publications (Working Papers) 3831, Inter-American Development Bank.
    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. Eduardo Lora, 1997. "A Decade of Structural Reform in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications 4074, Inter-American Development Bank, Research Department.
    6. 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.
    7. Aterido, Reyes & Hallward-Driemeier, Mary & Pagés, Carmen, 2011. "Does Expanding Health Insurance Beyond Formal-Sector Workers Encourage Informality?: Measuring the Impact of Mexico's Seguro Popular," IDB Publications (Working Papers) 4551, Inter-American Development Bank.
    8. 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.
    9. 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.
    10. 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, CIDE, División de Economía, vol. 0(2), pages 403-448, July-Dece.
    11. Adriana Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 389-410, August.
    12. Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
    13. 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.
    14. Pagés, Carmen & Madrigal, Lucía, 2008. "Is Informality a Good Measure of Job Quality?: Evidence from Job Satisfaction Data," IDB Publications (Working Papers) 1098, Inter-American Development Bank.
    15. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December.
    16. Sebastian Galiani & Federico Weinschelbaum, 2012. "Modeling Informality Formally: Households And Firms," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 821-838, July.
    17. Grant Miller & Diana Pinto & Marcos Vera-Hernández, 2013. "Risk Protection, Service Use, and Health Outcomes under Colombia's Health Insurance Program for the Poor," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 61-91, October.
    18. Marcelo Bérgolo & Guillermo Cruces, 2011. "Labor Informality and the Incentive Effects of Social Security: Evidence from a Health Reform in Uruguay," IDB Publications (Working Papers) 62318, Inter-American Development Bank.
    19. 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.
    20. Leonardo Gasparini & Francisco Haimovich & Sergio Olivieri, 2009. "Labor informality bias of a poverty-alleviation program in Argentina," Journal of Applied Economics, Universidad del CEMA, vol. 12, pages 181-205, November.
    21. Adriana Camacho & Emily Conover, 2011. "Manipulation of Social Program Eligibility," American Economic Journal: Economic Policy, American Economic Association, vol. 3(2), pages 41-65, May.
    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. Bosch, Mariano & Manacorda, Marco, 2012. "Social policies and labor market outcomes in Latin America and the Caribbean: a review of the existing evidence," LSE Research Online Documents on Economics 58003, London School of Economics and Political Science, LSE Library.
    2. François Gerard & Gustavo Gonzaga, 2013. "Informal Labor and the Cost of Social Programs: Evidence from 15 Years of Unemployment Insurance in Brazil," Textos para discussão 608, Department of Economics PUC-Rio (Brazil).
    3. 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, CIDE, División de Economía, vol. 0(2), pages 403-448, July-Dece.
    4. Alejandro del Valle, 2013. "Is Formal Employment Discouraged by the Provision of Free. Health Services to the Uninsured ? Evidence From a Natural Experiment in Mexico," Working Papers halshs-00838000, HAL.
    5. Tobias Pfutze & Carlos Rodríguez-Castelán, 2019. "Can a Small Social Pension Promote Labor Force Participation? Evidence from the Colombia Mayor Program," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2019), pages 111-154, October.
    6. Aterido, Reyes & Hallward-Driemeier, Mary & Pagés, Carmen, 2011. "Does Expanding Health Insurance Beyond Formal-Sector Workers Encourage Informality?: Measuring the Impact of Mexico's Seguro Popular," IDB Publications (Working Papers) 4551, Inter-American Development Bank.
    7. Garganta, Santiago & Gasparini, Leonardo, 2015. "The impact of a social program on labor informality: The case of AUH in Argentina," Journal of Development Economics, Elsevier, vol. 115(C), pages 99-110.
    8. Alejandro del Valle, 2013. "Is Formal Employment Discouraged by the Provision of Free. Health Services to the Uninsured ? Evidence From a Natural Experiment in Mexico," PSE Working Papers halshs-00838000, HAL.
    9. Calderón, Valentina & Marinescu, Ioana, 2011. "The Impact of Colombia's Pension and Health Insurance Systems on Informality," IDB Publications (Working Papers) 3831, Inter-American Development Bank.
    10. 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.
    11. Antón, Arturo & Boyd, Roy & Elizondo, Alejandra & Ibarrarán, María Eugenia, 2016. "Universal social insurance for Mexico: Modeling of a financing scheme," Economic Modelling, Elsevier, vol. 52(PB), pages 838-850.
    12. François Gerard & Gustavo Gonzaga, 2011. "Unemployment Insurance in Developing Countries: The Case of Brazil," Textos para discussão 593, Department of Economics PUC-Rio (Brazil).
    13. Luis E. Arango & Luz A. Flórez, 2017. "Informalidad laboral y elementos para un salario mínimo diferencial por regiones en Colombia," Borradores de Economia 1023, Banco de la Republica de Colombia.
    14. Azuara, Oliver & Marinescu, Ioana, 2013. "Informality and the expansion of social protection programs: Evidence from Mexico," Journal of Health Economics, Elsevier, vol. 32(5), pages 938-950.
    15. Antón, Arturo & Leal, Julio, 2013. "Aggregate Effects of a Universal Social Insurance Fiscal Reform," IDB Publications (Working Papers) 4580, Inter-American Development Bank.
    16. Gabriella Conti & Rita Ginja, Renata Narita, 2018. "The Value of Health Insurance: A Household Job Search Approach," Working Papers, Department of Economics 2018_18, University of São Paulo (FEA-USP).
    17. Eslava, Marcela & Haltiwanger, John C. & Kugler, Adriana & Kugler, Maurice, 2009. "Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia," IZA Discussion Papers 4256, Institute of Labor Economics (IZA).
    18. Almeida, Rita & Carneiro, Pedro, 2008. "Mandated benefits, employment, and inequality in a dual economy," Social Protection Discussion Papers and Notes 45051, The World Bank.
    19. Maria Anauati & Sebastian Galiani & Federico Weinschelbaum, 2015. "The rise of noncommunicable diseases in Latin America and the Caribbean: challenges for public health policies," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 24(1), pages 1-56, December.
    20. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2010. "Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 378-391, May.

    More about this item

    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

    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:oup:wbecrv:v:28:y:2014:i:3:p:446-466.. 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: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/wrldbus.html .

    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.