Determinants of Labor Demand in Colombia: 1976-1996 / Mauricio Cardenas, Raquel Bernal.

Format:

Book

Author/Creator:

Cardenas, Mauricio.

Contributor:

National Bureau of Economic Research.

Bernal, Raquel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10077.

NBER working paper series no. w10077

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Determinants of Labor Demand in Colombia

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Colombia's unemployment rate rose to 20% during the late 1990s from less than 8% in 1994. This paper argues that this has been the result of high non-wage labor costs embodied in the legislation. The estimated own-wage labor demand elasticity is around 0.5, which implies that a reduction in those costs, while politically costly, can have a significant payoff in terms of equity and efficiency. We also find that adjustment costs of changing employment as well as wage elasticities were not affected by changes in the regulations regarding severance payments and dismissal costs. In this sense, structural reforms did have an impact on labor demand through its effect on relative prices alone. Finally, we conclude that the wage elasticity of labor demand increases (in absolute terms) during contractions. Hence, the increase in prices and the beginning of a recession had a significant effect on employment.

Notes:

Print version record

November 2003.