PDF superior Parametric pension reform and the intensive margin of labor supply, evidence from Colombia

Parametric pension reform and the intensive margin of labor supply, evidence from Colombia

Parametric pension reform and the intensive margin of labor supply, evidence from Colombia

In the last decades, several countries undertook structural and parametric reforms in their pension systems. These reforms were particularly important in Latin American countries. The first country in the region that made these reforms was Chile, at the beginning of the 1980s. Some other countries followed the Chilean example; Bolivia, Mexico, Salvador and Dominican Republic substituted a fully-funded public system for a pay-as-you-go private sys- tem. Other countries, like Peru and Colombia, adopted a model in which both the public system and the private system coexist. The adoption of these structural and parametric reforms implied changes in replacement rates, minimum requirements to obtain pension ben- efits and contribution rates. It is well known that, economic theory predicts that many of these changes may imply changes in expected life-time income, labor choices and savings.
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17 Lee mas

Effects of Future Pension Benefits on Pre-retirement Labor Supply: Evidence from Chile

Effects of Future Pension Benefits on Pre-retirement Labor Supply: Evidence from Chile

The 2008 Chilean pension reform modified the distributive tier of the pension system to pre- vent old-age poverty for workers with low attachment to the contributory sector, while generating incentives to contribute. The reform changed both the minimum pension guarantee and the tar- geted minimum pension. Before 2008, the minimum pension was the pensi´on minima garantizada (PMG) and the non-contributory pension was the pensi´on asistencial (PASIS). After reaching the minimum retirement age, workers with a low self-financed pension were eligible to a benefit equal to the PMG as long as they contributed at least by 20 years, otherwise, they were entitled to a pension benefit equal to the PASIS as long as they belong to the poorest 60 percent of the popu- lation. After 2008, the distributive tier became the combination of a targeted minimum pension (pensi´on b´asica solidaria, PBS) and a contributory pension (aporte previsional solidario, APS). The APS tops the PBS with a benefit based on the worker accumulated pension savings, which phases out when the overall benefit reaches the maximum subsidized pension (pensi´on m´axima con aportes solidarios, PMAS). In addition, the reform extended pension coverage to retirement- age population in the three lower quintiles of the poverty indicator distribution regardless of the time of contribution. As an important exception, the reform established that workers older than 50 years old by 2008 who were entitled to a minimum pension will receive a pension benefit equal to the maximum between the PMG and the sum of the PBS and APS.
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37 Lee mas

The Costs of Bureaucracy and Corruption at Customs: Evidence from the Computerization of Imports in Colombia

The Costs of Bureaucracy and Corruption at Customs: Evidence from the Computerization of Imports in Colombia

This paper is related to the vast literature that aims at understanding how the removal of tariff and non-tariff barriers to trade affects the economy (Sachs et al., 1995; Dollar et al., 2003; Wacziarg and Welch, 2008; Rodrik et al., 2004) More recently, firm level studies have emphasized the benefits of trade liberalization for labor productivity and growth in the Canada-US free trade agreement (Trefler, 2004), Armenia (Halpern et al., 2011) and Indonesia (Amiti and Konings, 2007). Using the same Colombian manufacturing plants census data as the one used in this paper, Kugler and Verhoogen (2009), Eslava et al. (2015) and Fieler et al. (2018) provide evidence that, at least in the 1990s, inputs on the import market are higher quality than the ones on the domestic market. They are used by firms that are larger and more productive; and allow importing firms to produce better outputs and sell them to other local firms, who in turn can also improve their quality. Reduced costs of importing also lead to greater competitive pressures on local producers, which have been found to increase the productivity of firms more exposed to external competition . While increased productivity generates incentives to increase scale, these incentives may be overcome by the depressing pressure that competition exerts on a firm’s scale . Fieler et al. (2018), in fact, suggest that this was the case in the Colombian trade liberalization of the early 1990s. To this abundant body of literature on the effect of trade on firms, we add evidence on the potential effectiveness of reforms on the administrative margin of trade policy, which can be a win-win, both on fiscal and economic consequences. It may nonetheless generate losers among non-importing firms and customs agents, which may resist the reform. Compared to a change in tariff, the implementation of such a reform trades external political challenges for internal ones.
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43 Lee mas

Pension Incentives and Formal-Sector Labor Supply: Evidence from Colombia

Pension Incentives and Formal-Sector Labor Supply: Evidence from Colombia

To understand the impact of the change in qualifying conditions on formal-sector labor supply, I develop a model that characterizes workers’ decisions about retirement and job search in the formal and informal sectors. The model builds on the framework proposed by Chetty (2006) for unemployment insurance and adapted by Gerard and Gonzaga (2014) to include an informal sector. I modify the model to incorporate a defined-benefit pension system, where the worker is entitled to a pension after reaching a minimum retirement age and a minimum number of years of contributions (the vesting period). In the model, workers search for formal-sector jobs because these jobs increase the likelihood of getting pension benefits in the future. Within an age group, the long-run gains from working in the formal-sector are a nonlinear function of the years of contribution. The higher gains concentrate among workers who are just below the vesting period, since they are the ones more likely to see the vesting period as binding.
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56 Lee mas

Sorensen 2001  Nordic income dual

Sorensen 2001 Nordic income dual

applying to labour income would meet with formidable technical and political barriers. In practice, the call for so-called comprehensive income taxation typically boils down to the demand that interest and dividends earned outside the institutional sector be taxed in line with labour income. Such a procedure exacerbates the inequities and distortions in favour of tax-preferred savings where the returns take a form which is difficult to tax at high rates. If tax policy makers seek to reduce tax discrimination between capital income and labour income by moving toward some rudimentary form of comprehensive income tax, they will end up generating stronger discrimination in the taxation of the many different forms of capital income, so that more savings are channeled into tax-favoured assets. Indeed, there is no doubt that the Nordic tax reforms of the early 1990s were beneficial to labour because the acceptance of a low statutory rate of capital income tax made it technically and politically easier to broaden the capital income tax base, thereby significantly increasing the net revenue from capital income taxation.
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14 Lee mas

Armed Conflict Exposure, Human Capital Investments and Child Labor: Evidence from Colombia

Armed Conflict Exposure, Human Capital Investments and Child Labor: Evidence from Colombia

Previous studies such as those by Abadie and Gardeazabal (2003) and Alesina et al. (1996) have established the negative consequences armed or civil conflicts may have on the economies of affected regions. Similarly, Deininger and Okidi (1999) and Verwimp and Bundervoet (2008) prove that civil conflict has negative effects on households’ consumption growth. By the same token, Colombian households residing in municipalities experiencing high levels of violence could experience negative economic shocks, which could in turn force some children to work and leave school. Even though no previous study has directly evaluated the effect of violence or internal conflicts on the probability of children engaging in work, there is a vast literature relating economic shocks with children’s employment and schooling. With respect to Mexico, Skoufias and Parker (2006) found that the unemployment of household heads induces greater labor force participation among girls. With respect to Brazil, Duryea et al. (2007) found that negative economic shocks reduce school enrollment and increase children’s participation in the labor force. Similarly, Jacoby and Skoufias (1997) and Beegle et al. (2006) find that, within a credit constraint framework, income fluctuations affect school attendance (in the case of Indonesia) and labor supply (in the case of Tanzania) with respect to youths.
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45 Lee mas

Learning Curve in Make To Order and Make To Stock Logistics Management Approaches

Learning Curve in Make To Order and Make To Stock Logistics Management Approaches

It is known that by repeating an activity, you learn and the subject has the ability to do your job faster with better quality and lower cost of the product. This learning ability allowed the development of a prediction technique known as the "learning curve", first observed in [1] Since then, this technique has been applied in different production processes to consider the impact on productivity and quality of work and its incorporation in production planning. In [2], a knowledge creation framework is proposed, in which internal and external learning is directly related throughout the supply chain. It states that manufacturers would do well to allocate their resources to support and implement learning routines and strive to become a learning organization.
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6 Lee mas

Trade and labor markets: evidence from the Colombian trade liberalization process

Trade and labor markets: evidence from the Colombian trade liberalization process

The decision to engage in tariff reduction was due to the Barco administration (1986-1990). In 1989 the government decided to implement several structural economic reforms, trade and labor reforms among them. However, the political situation −including the assassination of several presidential candidates and the collapse of the international coffee agreement− prevented the reforms to actually take place that year. Early 1990, still under the Barco administration, the idea of the trade reform was retaken, and the government decided to begin a gradual liberalization program. According to this program, non tariff barriers would progressively be eliminated during a first phase that should last two years starting in February 1990. This increment in international exposure would be compensated with tariff increases and especially with a depreciation of the exchange rate. The second phase would last three years and would reduce tariffs gradually until they reached an average of 25%.
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32 Lee mas

Abandoning Coffee under the Threat of Violence and the Presence of Illicit Crops. Evidence from Colombia

Abandoning Coffee under the Threat of Violence and the Presence of Illicit Crops. Evidence from Colombia

Recent research in economics shows that violent conflict hinders economic development (Blattman & Miguel, 2010). Attacks deteriorate human capital, damages infrastructure and destroy households’ productive assets, imposing direct economic costs on the population (Akresh, Verwimp, & Bundervoet, 2011; Camacho, 2008; Ibáñez & Moya, 2010; Stewart & Fitzgerald, 2001). However, the economic costs of violence go beyond direct victimization by modifying the political, economic and social context in which households operate (Kalyvas, 2006). Violent contexts generate uncertainty, change relative prices and promote institutional changes (Blattman & Miguel, 2010; Tilly, 1992). Households modify their consumption and production decisions in order to prevent or mitigate the impacts of conflict (Blattman & Miguel, 2010; Brück, 2004; Justino, 2006). The threat of violence or the anticipation to violent shocks oblige rural households to revert to subsistence agriculture and shift portfolio to less risky, but also less profitable activities (Collier, 1999; Deininger, 2003; Morduch, 1995; Nillesen & Verwimp, 2009). Changes in prices and in the institutional context may increase the returns to participation in illegal activities. This generates incentives for households to switch from traditional agricultural activities to illicit crop cultivation. The warring factions involved in the conflict generally support themselves by the latter. Evidence for Afghanistan and Colombia shows that illicit crops such as opium and coca are important sources of money for illegal groups (Mejía & Rico, 2010; Rubin, 2000). Despite large short-term benefits from the cultivation of illegal crops for households, the long-term costs for economic development may be large. The presence of illegal activities intensifies criminal violence, weakens the judicial system and becomes an obstacle to end the conflict (Angrist & Kugler, 2008; Gaviria, 2000).
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52 Lee mas

The chilean pension reform : a model to follow?

The chilean pension reform : a model to follow?

One of the major impacts is the lower physical stock accumulation. Our calculations indicate that the growth rate of capital stock decrease in approximately 0.4% per year between 1981 and 2004, which adds up to 9.7%. The lower capital stock accumulation occurs because the household savings rate decreases (similar effects can be found in Auerbach & Kotlikoff, 1987). The result is not surprising and it obeys to two different transmission channels. In one hand, future benefits in the PAYG system lower individuals savings rate, as in any lifecycle model. In another hand, as this is a general equilibrium model, lower capital stock accumulation impacts relative prices. In fact, real wage decreases while the real rental rises over time (see Table 2). Lower wage rates decrease saving rates of young individuals while the increase on the saving rates should produce a substitution effect towards larger saving rates. However, as the rental rate almost do not change by the end of the horizon, it is possible that changes on relative price also lower capital stock accumulation, through the effect of wage rates. Adding up, both channels produce lower capital stock in about 9.7%.
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18 Lee mas

Auto component supply chain: a path to global India

Auto component supply chain: a path to global India

The survey was done among 101 leading auto component manufacturers in and around Pune. There were on an average 3 respondents from one company. In all we got 307 responses from respondent SCM professionals. Researcher used chi square test method for analysis. The responses were collected from a sample of supply chain professionals in a randomly selected sample from identified list of auto component manufacturing industries gathered through various sources. SCM professionals can be defined as persons who may be involved in the analysis, operations, and decision processes relative to transportation from supplier to customer.
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5 Lee mas

Life reform, educational reform and reform pedagogy from the turn of the century up until 1945 in Hungary

Life reform, educational reform and reform pedagogy from the turn of the century up until 1945 in Hungary

The Central European model for rural farming communes was provided by the Obstbausiedlung Eden (fruit-growing settlement of Eden), established in 1893 in Berlin Oranienburg. Various types of similar communities were formed across Europe in their wake, with the most frequent ones including communities pursuing selfsufficient horticulture, a close-to-nature lifestyle on the edges of towns and a self- sufficient rural agricultural activity. Besides the slogans of the lifestyle reform’s health cult, the ideological elements of the producer and consumer cooperatives and land reform movements were also present. The chapter of Hungarian vegetarian producer communes was opened by Béla Bicsérdy (1872-1951), who founded a short-lived community with his wife and followers on the small island of Ada Kaleh on the Lower Danube. These settlers took cold baths all year round, wore light and loose reform clothing, and were eager readers of books on sociology and the natural sciences as well as writings about biology, natural diets and Buddhism. The other farming commune in Hungary with a somewhat longer lifespan was the Bubán colony in Szentendre, which started its operation on the plot of land owned by painter Sándor Markó (1902-1993). By 1935 the community had 24 families and 90 members. Each family farmed 1 or 2 acres of land, on which they grew the plants needed for their diet. They even published a periodical, titled Life Reform, from 1932, in which they published articles about the subject (Nagy & Németh, 2017, pp. 58-64).
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20 Lee mas

The Long Trace of Inequality: Evidence from Cundinamarca, Colombia

The Long Trace of Inequality: Evidence from Cundinamarca, Colombia

The power of large landowners was cemented in the allocation of forced native labor, which provided them with permanent as well as temporary labor supply. This power did not diminish when forced native labor was abolished in 1720, since much of the traditional customs persisted as well as the landowner’s control over local labor supply (Tovar, 1994). Also, with very few exceptions, the hacienda influenced the political power (Ocampo, 1997, 1984). In the XVIII century, landownership concentration not only persisted but deepened. Large agricultural enterprises - integrated by numerous haciendas - became more common, basically because continental Spaniards that established in the province of Santa Fé bought land titles from ancient families or the Church. In 1777, a colonial official emphasized how there were “two kinds of people: one that possesses his own land and belongs to the gentleman´s class and one that is poor and lives in the lands of the first […] suffering a servitude worse than that of slaves” (McFarlane, 1997, p.101).
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40 Lee mas

Publicness of goods and violent conflict : evidence from Colombia

Publicness of goods and violent conflict : evidence from Colombia

All tables are reported in Appendix A. As a baseline set of results in Table 2 we report the estimations of Equation (6). These are ”naive” estimations because do not tackle endogeneity issues. For each measure of conflict we report coefficients with (columns with even numbers) and without (columns with odd numbers) controls. As pointed out above the correlation between coca and conflict is positive, although not always significant. It is always significant for the onset of paramilitary attacks, but it is not for guerrilla attacks once we introduce controls. Since the incidence of guerrilla attacks is larger than that of paramilitary attacks, total attacks become not significant in the specifications with controls. Correlation between road density and conflict seems to be negative. It is significant for all measures of conflict once we introduce controls. Correlation between education quality and conflict is more erratic both in magnitude and sign. Specifications with controls show a positive correlation (the one for guerrilla attacks is significant). None of these results show the ordering of coefficients that we expect from the theory.
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26 Lee mas

Informalidad y movilidad laboral: un análisis empírico para Argentina

Informalidad y movilidad laboral: un análisis empírico para Argentina

"Growth and Income Poverty in Latin America and the Caribbean: Evidence from Household Surveys".. "Labor Participation and Earnings.[r]

35 Lee mas

Pobreza multidimensional relativa: una aplicación a la Argentina

Pobreza multidimensional relativa: una aplicación a la Argentina

"Growth and Income Poverty in Latin America and the Caribbean: Evidence from Household Surveys".. "Labor Participation and Earnings.[r]

24 Lee mas

The War on Illegal Drug Production and Trafficking: An Economic Evaluation of Plan Colombia.

The War on Illegal Drug Production and Trafficking: An Economic Evaluation of Plan Colombia.

We now consider the calibration of the model. As the reader shall see, the calibration follows recursively. That is, using the observed data described in the previous section, we start with the equations of the model where we can estimate parameters with the infor- mation that we have and then turn to other equations of the model in order to estimate the remainder parameters. We first calibrate the model without the assumption that the interested outsider (i.e., the U.S. government) chooses an efficient allocation of subsidies between the two fronts of the war on drugs. In other words, we allow the available infor- mation to determine whether the subsidies granted by the U.S. government for the war on drugs in Colombia have been assigned efficiently; if not, we estimate the efficiency cost of this misallocation. As discussed in the previous section, the condition for an efficient allo- cation of subsidies is that the marginal cost (again, to the U.S.) of decreasing the successful production and exportation of drugs by one kilogram through subsidizing the Colombian military’s efforts against illegal drug production (equation 47) should be equal to the mar- ginal cost (to the U.S.) of decreasing the successful production and exportation of drugs
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60 Lee mas

FEMALE LABOR SUPPLY AND FERTILITY. CAUSAL EVIDENCE FOR LATIN AMERICA

FEMALE LABOR SUPPLY AND FERTILITY. CAUSAL EVIDENCE FOR LATIN AMERICA

Many other studies have tried to extend AE’s work to other countries using the same source of exogenous variation in fertility. Iacovou (2001) and Van der Stoep (2008) used the same-sex instrument as in AE for the United Kingdom and South Africa, respectively, and in both cases, the IV estimates were not statistically significant. Daouli, Demoussis and Gian- nakopoulos (2009) did the same for Greece, finding a negative causal effect on the probability of working at the 10% level in 1991, which disappears in 2001. In Sweden, Hirvonen (2009) found a strong negative effect on women’s earnings and a mild effect on labor force participation. Cools (2012) obtained a similar result for Norway, although the effect on labor participation is not precise enough to be statistically different from zero. Cruces and Galiani (2007) found a negative causal effect for Argentina and Mexico. Finally, Chun and Oh (2002) for South Korea, and Agüero and Marks (2008) for a pool of 6 Latin American countries used variations of AE’s empirical strategy. 3 In the first case, the authors found a strong ne-
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39 Lee mas

Child Labor, Home Production and the Family Labor Supply

Child Labor, Home Production and the Family Labor Supply

The paper is organized as follows: Section II presents a theoretical model of family labor supply with home production. The model is solved using the Kuhn- Tucker method, paying special attention to the possible corner solutions of the variables. Section III presents the comparative static. The substitution and income effects on household work and market labor of changes in wages and unearned income are shown in the interior solution case. A complete analysis of corner solutions and the appropriate opportunity costs (shadow prices) of the activities are presented in Section IV. In Section V, the implications of the model are com- pared to the situation in which the family is at subsistence level (the minimum level of consumption for survival), and I find the “slope” of the child labor sup- ply at the subsistence level, a discussion point in child labor literature. Section VI concludes the paper.
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21 Lee mas

Effects of In-Kind transfers on female labor supply: evidence from the food supply program comedores comunitarios

Effects of In-Kind transfers on female labor supply: evidence from the food supply program comedores comunitarios

A good illustration of matching quality is the density of the propensity score for control and treatment groups before and after the matching. Figure 1 shows those kernel densities by each outcome (as the working hours sample is a subset of the participation decision one and as it includes further controls). The densities for the matching for the specific household groups are presented on figures 3 and 4. In all cases the quality of the process can be seen: the propensity scores before matching are notoriously different but are very similar after it. Additionally, at first sight common support seems to be assured. In fact, using a caliper of 0.01, all treated observations are included for participation decision and 3 are lost in the weekly working hours’ specification. In both cases the balance property seems to be achieved in all variables as no significant mean difference remains. Moreover, most of the standardized bias are below 5%, as usual empirical studies (Caliendo and Kopeinig, 2005). Those results can be found in table 38 for participation decision and in table 43 for working hours. Along this paper, different variations of the matching procedure are implemented and presented. Their respective balance property tables are presented on the additional tables section on the appendix C.3.
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49 Lee mas

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