Determinants of Labor Demand in Colombia 1976–1996

Mauricio Cárdenas and Raquel Bernal

in Law and Employment

Published by University of Chicago Press

Published in print October 2004 | ISBN: 9780226322827
Published online March 2013 | e-ISBN: 9780226322858 | DOI:
Determinants of Labor Demand in Colombia 1976–1996

Show Summary Details


Under the old system, employers managed the funds, and employees were allowed to make partial withdrawals at any time. At the time of separation, those withdrawals were debited in nominal terms, adding to the costs faced by employers. In practice, the new system implied a reduction in the level and uncertainty of severance payments for firms. In fact, the initial effect of the reform was to lower nonwage labor costs to 42.9 percent of the basic wage, down from 47.1 percent during the late 1980s. However, the reform did not deal with other important areas of labor legislation, especially payroll taxation. The reform package also included a social security law, enacted in 1993, which raised employers' mandatory contributions for health and pension programs. From the viewpoint of the labor market, this reform had important implications resulting from the significant increase in nonwage labor costs. This chapter analyzes the combined effect of these two reforms on labor demand.

Keywords: labor demand; Colombia; severance payments; nonwage labor costs; labor legislation; payroll taxation

Chapter.  10877 words.  Illustrated.

Subjects: Company and Commercial Law

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.