Publications

Working papers

  • 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 young workers under the age of 28 in Colombia. We use differential degrees of 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 have two different treatment groups and use a difference-in-difference model. The effect of reducing payroll taxes is asymmetric for youth who earn below, near and above the minimum wage. Reducing payroll taxes increased the probability of getting formal employment by 8.5% and increased the probability of participating in the labor market by 4% for young people who face labor markets where the median salary is near the minimum wage. However, informality did not decrease. Pass through effect are null which is consistent with a labor market with high wage rigidities.

  • Social Networks and formal vs informal employment
  • Sovereign default and output volatility [PDF]