An unintended outcome…

Gender Economics

For those who know Colombia, one of the most intriguing elements of the functioning of its labor market is the unemployment rate. Obstinately above 10% for over a decade, irresponsive to the cycle, Colombia has recently known some respite with a lower unemployment rate. Several analysts commend the 2012 tax reform, which reduced the ill-famed no labor costs (to 54% of minimum wage) that characterize the labor market.

At the end of 2014 female unemployment was 10.7% and male around 7.9%, a difference which has been persistent over time and amplified by recessions. These disparities are geographically heterogeneous and their size is not associated with the employment rates. Gaps are larger in coastal cities that generally record lower unemployment rate, and smaller in Bogota and Medellin.

Interestingly women, generally more educated than men (10 years and 8 respectively) record worse labor market outcomes at all levels: higher unemployment rates, lower participation, lower occupation and lower wages. This in spite of Colombia having one of the highest female participation rates in the region. Women unemployed are on average younger and more educated than men. Generally married or in domestic partnership, 20% are head of households and with children below 5 years old.

Recent research effort by the Central Bank of Colombia has rekindled attention to these gender differences. Family responsibilities emerge as serious determinant of women chances to participate and succeed in the labor market.

Colombia has strived in its legislation to avoid gender discrimination and promote female participation. Legislation in place offers several instruments to protect female workers with indefinite contracts, ranging from protection against dismissal during pregnancy, maternity leave, extended in 2011 from 12 to 14 weeks, and job reintegration, among others. Faced with an increase in part time and fixed term contracts, the Colombian Constitutional court, well –known for its tireless defense of social rights, extended this protection to fixed term contracts.

Ramirez, Tribin and Vargas analyze the impact of the extended maternity. They find that female inactivity increase in the high fertility cohort, after the changes in maternity leave come in place. Employers are less willing to contract women in their fertility age. Faced with increase difficulty to find a job, women opt out of the labor market becoming inactive. Others undesirable outcomes relate to the higher incidence of female informality and self-employment following legislation implementation, leading to low productivity and low paid jobs. An example of legislation meant to protect which turns out to negatively affect the beneficiaries

Beside a cultural change and a more equal sharing of family responsibilities and children upbringing, authors suggest concrete policy interventions to mitigate these outcomes. A parental leave, European style, where either parent could provide for the children, could represent a step in this direction. Lowering employer’s maternity leave costs would be another.

By the way, it is not just Colombia. Lai and Masters in 2005 find that Taiwanese female workers experienced a worsening of their economic situation and lower wages as a result of maternity leave. Not to go far, according to Blau and Khan, US lags behind the rest of the OECD, as lower US female participation in the labor market (vis-a vis OECD), might be partially associated with the lack of family friendly policies, such as parental leave and flexible time schedule.

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