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Urban wage gaps in Colombia and the impact of a national payroll tax policy

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  • Paula Herrera-Idárraga
  • Pablo Adrian Garlati-Bertoldi
  • Juan David Torres

Abstract

In this paper we analyse the unintended effects of a national policy. We explore how national payroll taxes policies can explain changes in wage gaps between cities. To do so, we exploit a payroll tax reform implemented in 2012 in Colombia. Using monthly data between 2011 and 2014, we estimate the effect of this policy in the lower part of the income distribution, and in particular at a window around the minimum wage, relying on a triple-difference estimation. Our results suggest that national policies aimed at reducing informality can have important effects in reducing wage gaps across cities.

Suggested Citation

  • Paula Herrera-Idárraga & Pablo Adrian Garlati-Bertoldi & Juan David Torres, 2022. "Urban wage gaps in Colombia and the impact of a national payroll tax policy," Regional Studies, Taylor & Francis Journals, vol. 56(3), pages 489-503, March.
    • Handle: RePEc:taf:regstd:v:56:y:2022:i:3:p:489-503
    DOI: 10.1080/00343404.2021.1908535
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