Publications

Working papers

  • Training Courses and Formal Employment [PDF]

Abstract: This paper analyzes the effect of a training component of a labor intermediation policy (LIP) called Boost to Employment (BE) on the probability of finding a formal job for vulnerable unemployed workers in a developing country. To mitigate the selection problem I instrument for whether an unemployed worker who participated in BE received the training component of the program with a measure of leniency from their labor counselor. I also test which courses are the ones that helped vulnerable job seekers to find formal jobs. I find that those workers who received the training component increased the probability of working in the formal sector by 20 percentage points one year after the implementation of the program compared to those workers who did not receive the training component. Moreover, I find that the course that is driving results is giving information about the value of formality, which increased the probability of job seekers being hired in the formal sector by 11 percentage points compared to those who were not assigned to the the formal job benefits course.

  • Payroll taxes, wage rigidities and youth unemployment: Evidence from the Colombian labor market [PDF] with Eduard Martínez

Abstract: This paper studies the effect on labor market outcomes of a payroll tax cut for new hires of young workers under the age of 28 in an economy with a high binding minimum wage. We use exposure to wage rigidities to identify the effect. We measure an individual's exposure to wage rigidities as the gap between the median salary, in the city in which the individual lives, and the minimum wage set at the national level. We use a difference-in-difference model. The effect of a payroll tax cut is asymmetric for youth who face labor markets with a binding minimum wage and those who do not. Reducing payroll taxes increased the probability of being formally employed given that the person is employed by 16% and increased the probability of participating in the labor market by 5% for young people below 28 compared to people above 28. Pass through effect are null which is consistent with a labor market with high wage rigidities.

  • Job referrals, minimum wage and labor market outcomes [PDF]

Abstract: Despite their documented importance in the labor market, little is known about how salaried workers use job referrals to find their jobs and their correlation with wages in developing countries. This paper contributes to the literature of job referrals and labor market outcomes showing that job referrals pay a premium or penalty to workers depending on whether the minimum wage is binding or not. I show that in Mexico where the median wage is 40% the minimum wage, salaried workers who used job referrals as the principal way to get their current job report earning higher wages than salaried workers who used other methods of search. In contrast, in Colombia where the median wage is 90% the minimum wage, workers who used job referrals as the principal search method have a wage penalty. This paper explores a mechanism to try to reconcile these two different stories. I argue that a possible reason for these different results is that workers use job referrals for different reasons, depending whether it is easy or hard to find employment.

  • Sovereign default and output volatility [PDF]