Information about this author at RePEc
NBER Working Papers and Publications
|August 2004||Determinants of Labor Demand in Colombia. 1976-1996|
with Mauricio Cardenas
in Law and Employment: Lessons from Latin America and the Caribbean, James J. Heckman and Carmen Pagés, editors
|November 2003||Determinants of Labor Demand in Colombia: 1976-1996|
with Mauricio Cardenas: w10077
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 contr...