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The Incidence of Job Security Regulations on Labor Market Flexibility and Compliance in Colombia: Evidence from the 1990 Reform

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  • Adriana Kugler

Abstract

Utilizing differences-in-differences estimates, this paper reviews the impact of reduced firing costs on the dynamism of the Colombian labor market. The effects include raising exit rates into and out of unemployment, increasing compliance with labor legislation by lowering the costs of formal production, and reducing unemployment from the late 1980s to the early 1990s. On the other hand, labor market reform appeared to explain in part increasing unemployment during the late 1990s. In general, greater flexibility in hiring and firing is likely to translate into increased hiring relative to firing during expansions, but increased firing relative to hiring during recessions.

Suggested Citation

  • Adriana Kugler, 2000. "The Incidence of Job Security Regulations on Labor Market Flexibility and Compliance in Colombia: Evidence from the 1990 Reform," Research Department Publications 3094, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:3094
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    References listed on IDEAS

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    Cited by:

    1. Can, Raif, 2015. "The Impact of Employment Protection Legislation on the Unemployment Rate in Selected OECD Countries," MPRA Paper 63329, University Library of Munich, Germany.
    2. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
    3. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2000), pages 109-154, August.
    4. Manes, Eran & Schneider, Friedrich & Tchetchik, Anat, 2016. "On the Boundaries of the Shadow Economy: An Empirical Investigation," IZA Discussion Papers 10067, Institute of Labor Economics (IZA).
    5. Arias, Omar & Blom, Andreas & Bosch, Mariano & Cunningham, Wendy & Fiszbein, Ariel & Lopez Acevedo, Gladys & Maloney, William & Saavedra, Jaime & Sanchez-Paramo, Carolina & Santamaria, Mauricio & Siga, 2005. "Pending issues in protection, productivity growth, and poverty reduction," Policy Research Working Paper Series 3799, The World Bank.
    6. Irène Selwaness & Chahir Zaki, 2015. "On the Interaction Between Trade Reforms and Labor Market Regulation: Evidence from the MENA Countries' Labor Markets," Working Papers 970, Economic Research Forum, revised Nov 2015.
    7. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4303, Inter-American Development Bank, Research Department.
    8. Taborda, Rodrigo & Guataqui, Juan Carlos, 2011. "Manufacturing Employment and Wage Differentials After Structural Adjustment Reforms in Colombia: An Efficiency Wages Approach," Revista Lecturas de Economía, Universidad de Antioquia, CIE, June.
    9. Gustavo Gonzaga, 2003. "Labor Turnover and Labor Legislation in Brazil," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2003), pages 165-222, August.
    10. Luis BECCARIA & Roxana MAURIZIO, 2020. "Labour market turnover in Latin America: How intensive is it and to what extent does it differ across countries?," International Labour Review, International Labour Organization, vol. 159(2), pages 161-193, June.
    11. David KUCERA & Leanne RONCOLATO, 2008. "Informal employment: Two contested policy issues," International Labour Review, International Labour Organization, vol. 147(4), pages 321-348, December.
    12. Wang, Huijuan & Ding, Lin & Guan, Rong & Xia, Yan, 2020. "Effects of advancing internet technology on Chinese employment: a spatial study of inter-industry spillovers," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    13. Maja Micevska, 2004. "Unemployment and Labour Market Rigidities in Southeast Europe," wiiw Balkan Observatory Working Papers 49, The Vienna Institute for International Economic Studies, wiiw.
    14. Eduardo Lora & Ugo Panizza, 2002. "Las reformas estructurales en América Latina bajo la lupa," Research Department Publications 4302, Inter-American Development Bank, Research Department.
    15. Sofi Irfan Ahmad & Sharma Pritee, 2015. "Labour Laws and Informalisation of Employment: Panel Evidences from Indian Formal Manufacturing Sector," Asian Journal of Law and Economics, De Gruyter, vol. 6(1), pages 65-84, April.
    16. Carmen Pagés-Serra & James J. Heckman, 2000. "El costo de la regulación de la estabilidad laboral: elementos de juicio de los mercados laborales latinoamericanos," Research Department Publications 4228, Inter-American Development Bank, Research Department.

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    More about this item

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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