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Please use this identifier to cite or link to this item: http://hdl.handle.net/10625/48642

Title: Labor costs, labor informality and income distribution in Colombia and Chile, 1984-2009
Authors: Sánchez Torres, Fabio
Alvarez Vos, Oriana
Keywords: LABOR COSTS REGULATIONS
LABOR INFORMALITY
MINIMUM WAGE AND SIZE OF WORKPLACE
CHILE
COLOMBIA
LATIN AMERICA AND THE CARIBBEAN
SOUTH AMERICA
LABOUR MARKET
LABOUR POLICY
LABOUR LAW
LABOUR LEGISLATION
ECONOMIC IMPLICATIONS
INCOME DISTRIBUTION
LOW INCOME GROUPS
LABOUR COSTS
INFORMAL SECTOR
MINIMUM WAGE
LATIN AMERICA
CARIBBEAN
Issue Date: 2011
Publisher: Universidad de los Andes, Bogotá, CO
Abstract: The labor costs regulations such as the minimum wage, the contributions to social security and the payroll taxes has been the subject of intense debates and academic discussion because the distortions and inefficiencies they may cause on the labor markets. Colombia has one of the onerous labor regulations in the region both because of their relatively high minimum wage and the elevated contributions to social security and payroll taxes. Chile, in contrast, has a flatter structure of non wage labor costs with few labor costs different from the wage in charge of the employers. So as to determine the impact of labor costs on informality, size of the workplace and labor earnings we estimate a simultaneous model using three stage least squares for Colombia and Chile. After calculating the reduce form of the model we perform several simulations. We find that the changes in the labor regulations of the last two decades have deeply affected the functioning and outcomes of the labor markets. In the Chilean case such regulation has contributed to hinder informality among the non skilled workers, to incentive the placement of workers in relatively large firms being at the same time neutral in distributional terms. The Colombian labor regulation of the last 20 years has promoted informality among the non skilled, prompted formality among the skilled, confined the non skilled in small firms and deeply contributed to the rise of concentration of labor earnings.
Description: Includes an abstract in Spanish
URI: http://hdl.handle.net/10625/48642
Project Number: 105639
Project Title: Labour Market Regulations, Outcomes and Income Distribution in Colombia and Chile
Appears in Collections:IDRC Research Results / Résultats de recherches du CRDI
Research Results (GGP) / Résultats de recherches (MCP)

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