Labor Costs, Non-Labor Costs and Their Impact on Unemployment, Unemployment Duration and Informality in Colombia, 1980-2007 (Costos Laborales y no Laborales y su Impacto Sobre el Desempleo, la Duración del Desempleo y la Informalidad en Colombia, 1980-2007) (Spanish)

68 Pages Posted: 10 Oct 2009

See all articles by Fabio Sánchez

Fabio Sánchez

Universidad de los Andes, Colombia - Department of Economics

Valentina Duque

Columbia University

Mauricio Ruíz

Universidad de los Andes, Colombia - Department of Economics

Date Written: April 9, 2009

Abstract

This document offers a long-run overview of the labor market in Colombia analyzing the effects of payroll taxes and minimum wage on the unemployment rate, unemployment duration and labor informality. The estimations indicate that the increase of payroll tax generates a rise in informality, unemployment and its duration. It is shown that rise in nonlabor costs occurred since 1990s has augmented unemployment by 3.5 percentage points, informality by 5.3 points and unemployment duration by six weeks. Thus, this paper confirms what has been pointed out by other studies about the negative impact that have the rise of labor and non-labor costs on labor market outcomes.

Keywords: unemployment, informality, duration of unemployment, labor costs, minimum wage, payroll taxes

JEL Classification: H22, H30, H31, J32, J38

Suggested Citation

Sánchez Torres, Fabio and Duque, Valentina and Ruíz, Mauricio, Labor Costs, Non-Labor Costs and Their Impact on Unemployment, Unemployment Duration and Informality in Colombia, 1980-2007 (Costos Laborales y no Laborales y su Impacto Sobre el Desempleo, la Duración del Desempleo y la Informalidad en Colombia, 1980-2007) (Spanish) (April 9, 2009). Documento CEDE No. 2009-11, Available at SSRN: https://ssrn.com/abstract=1486120 or http://dx.doi.org/10.2139/ssrn.1486120

Fabio Sánchez Torres (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia
+57 1 332 4495 (Phone)
+57 1 332 4492 (Fax)

Valentina Duque

Columbia University ( email )

Mauricio Ruíz

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

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