1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Income Inequality and Poverty in Colombia - Part 1. The Role of the Labour Market

Income inequality in Colombia has declined since the early 2000s but remains very high by international standards. Income dispersion largely originates from the labour market, which is characterised by a still high unemployment rate, a pervasive informal sector and a wide wage dispersion reflecting a large education premium for those with higher education. Reducing income inequality is a key government objective and this requires improving the performance of the labour market. Raising educational outcomes for all and enhancing training programmes would help improve labour supply and productivity. Formal job creation however remains heavily constrained by restrictive labour market regulations, in particular very substantial non-wage labour costs and a minimum wage which is high compared to average incomes. The 2012 tax reform reduces non-wage labour costs but more decisive steps are needed to create the right conditions and incentives to boost formal employment.

English

Keywords: Colombia, labour taxes, inequality, gender discrimination, poverty, informal economy, education
JEL: J16: Labor and Demographic Economics / Demographic Economics / Economics of Gender; Non-labor Discrimination; I24: Health, Education, and Welfare / Education and Research Institutions / Education and Inequality; I32: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / Measurement and Analysis of Poverty; O17: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Formal and Informal Sectors; Shadow Economy; Institutional Arrangements; J3: Labor and Demographic Economics / Wages, Compensation, and Labor Costs; O5: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies; I3: Health, Education, and Welfare / Welfare, Well-Being, and Poverty; J2: Labor and Demographic Economics / Demand and Supply of Labor; H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies; H52: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Education
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