Income Inequality and Poverty in Colombia - Part 1. The Role of the Labour Market

Abstract

Income inequality and poverty in Colombia Part 1. The role of the labour market Income inequality in Colombia has declined since the early 2000s but remains very high by international standards. Income dispersion largely originates from the labour market, which is characterised by a still high unemployment rate, a pervasive informal sector and a wide wage dispersion reflecting a large education premium for those with higher education. Reducing income inequality is a key government objective and this requires improving the performance of the labour market. Raising educational outcomes for all and enhancing training programmes would help improve labour supply and productivity. Formal job creation however remains heavily constrained by restrictive labour market regulations, in particular very substantial non-wage labour costs and a minimum wage which is high compared to average incomes. The 2012 tax reform reduces non-wage labour costs but more decisive steps are needed to create the right conditions and incentives to boost formal employment.

Formal Employment and Organised Crime: Regression Discontinuity Evidence from Colombia

“…We test the simple hypothesis that the SR conditions disincentivized formal-sector employment and led to an increase in organized-crime activities. We first reproduce a well-established result and show that the program has a negative effect on formal employment (Camacho et al, 2014;Gaviria et al, 2007;Joumard and Londono, 2013;Santamaria et al, 2008). We exploit the discontinuity in enrollment rates at the cutoff, by using the eligibility indicator as an instrument for enrollment status to identify the effect of SR on formal employment and income.…”

“…Since the Sisben score and targeting is at the family level rather than individual level, older family members may discourage youth within the family from joining the formal labor force for fear of losing access to benefits. 23 Large families stay informal in the hope of retaining benefits (Joumard and Londono, 2013). 24 Indeed, Santamaria et al (2008) find that half of all SR recipients indicated that they would not switch to formal employment as it would mean losing benefits.…”

“…Lower formal sector employment at the cutoff may be a combination of fewer youth joining the formal sector as they enter working-age, lower transition rates out of informal work, and higher transition probabilities out of formal work at the cutoff. As formal sector employment affects SR enrollment for the entire family, these are often family decisions, where older family members may discourage youth from joining the formal sector (Joumard and Londono, 2013).…”

Assessing Gang Risks in Post-War Environments: The Case of Colombia

“…Though costly, Colombia's conflict did not destroy the national economy as often hap pens in protracted internal wars. Poverty, extreme poverty, and, to a lesser extent, income inequality declined from the mid2000s until 2017 (Joumard andLondoño 2013, World Bank 2019). Nonetheless, economic marginalization is a significant risk factor in Colombia, which remains one of the most unequal countries globally and, contrary to expectations on post conflict economic growth, experienced a rise in both poverty and urban income inequality in 2018 (World Bank 2019).…”

Seismic risk scenarios for the residential buildings in the Sabana Centro province in Colombia

“…In fact, the same study showed that Colombia's economy has the second most uneven distribution of income within Latin America, with only Brazil being higher. In Colombia, inequality goes beyond income level, as it is also present in aspects related to the quality of life, such as social security, access to basic services, education, and so forth (Joumard and Londoño Vélez, 2013). These differences are visible throughout the country, and the Sabana Centro province is an example of this.…”