The Effect of Job Security Regulations on Labor Market Flexibility: Evidence from the Colombian Labor Market Reform

摘要: Job security provisions are widely believed to reduce dismissals and hiring. In addition, in developing countries job is compliance with labor regulations increase informal activity. Reductions dismissal costs are, thus, often advocated as a way market flexibility regulations. This paper analyzes the impact of substantial reduction introduced by Colombian Labor Market Reform 1990. A theoretical model illustrates effect when there noncompliant sector. The shows direct on increased turnover well second order effects wages composition compliant sectors. Using microdata from National Household Surveys, I exploit temporal variability together coverage between formal workers (who not covered were, directly affected reform). differences-in-differences results indicate separations accessions for relative after reform. Moreover, worker was greatest among younger workers, more educated employed larger firms who most likely have been estimates, steady-state conditions model, suggest reform contributed 10% unemployment during period study.