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- Publicación |A 1% decrease in payroll costs would increase employment in the formal sector by between 0.5% and 0.9%. This implication is specific to the Colombian context, where the minimum wage is binding for a large portion of formal sector workers, making it likely that formal labor demand drives these…
- Publicación |Abstract
Developing countries have a vast informal sector generally associated with low productivity levels. The response of informal employment to tax policies might depend on labor market rigidities. This paper proposes a theoretical framework consisting of a search and…
- Publicación |
In 2013 Colombia implemented a tax reform which, among other things, reduced payroll taxes by a total of 13.5 percentage points of wages. In this paper we evaluate the effects of this component of the 2012 Colombian tax reform on firms’ formal employment and average wages. We construct a panel…
