TY  - JOUR
AU  - Cardenas, Mauricio
AU  - Bernal, Raquel
TI  - Determinants of Labor Demand in Colombia: 1976-1996
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10077
PY  - 2003
Y2  - November 2003
DO  - 10.3386/w10077
UR  - http://www.nber.org/papers/w10077
L1  - http://www.nber.org/papers/w10077.pdf
N1  - Author contact info:
Mauricio Cardenas
Titularizadora Colombiana
Cra 9 A 99-02, Piso 7
Bogota D.C.  Colombia
E-Mail: no email available

Raquel Bernal
Universidad de los Andes
E-Mail: rbernal@uniandes.edu.co
M1  - published as Mauricio Cardenas, Raquel Bernal. "Determinants of Labor Demand in Colombia.  1976-1996," in James J. Heckman and Carmen Pagés, editors, "Law and Employment: Lessons from Latin America and the Caribbean" University of Chicago Press (2004)

AB  - 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.
ER  -