Effects of Colombia's Social Protection System on Workers'Choice between Formal and Informal Employment

37 Pages Posted: 20 Apr 2016

See all articles by Adriana Camacho

Adriana Camacho

Universidad de los Andes, Colombia - Department of Economics

Emily Conover

Hamilton College - Economics Department

Alejandro Hoyos

Universidad de los Andes, Colombia

Date Written: August 1, 2013

Abstract

This paper examines whether the Colombian government's expansion of social programs in the early 1990s, particularly the publicly provided health insurance, discouraged formal employment. Using household survey data and variation across municipalities in the onset of interviews for the SISBEN, the instrument used to identify beneficiaries for public health insurance, it shows robust and consistent estimates of an increase in informal employment of approximately 4 percentage points. Similar results are obtained using an alternative dataset, consisting of a panel of individuals interviewed for the first and second SISBEN. The findings suggest that marginal individuals optimized when deciding whether to participate in the formal sector.

Keywords: Health Monitoring & Evaluation, Labor Markets, Health Systems Development & Reform, Labor Policies, Population Policies

Suggested Citation

Camacho, Adriana and Conover, Emily and Hoyos, Alejandro, Effects of Colombia's Social Protection System on Workers'Choice between Formal and Informal Employment (August 1, 2013). World Bank Policy Research Working Paper No. 6564, Available at SSRN: https://ssrn.com/abstract=2307810

Adriana Camacho (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

Emily Conover

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States

Alejandro Hoyos

Universidad de los Andes, Colombia ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311
Colombia

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