Portal Red Investigadores de Economía

The labor market in Colombia performs better than suggested by the high underemployment rate which is tantamount to low quality employment. Given the wage gap among those that complain about their wages and those that do not, the effective underemployment rate in Colombia should be much lower than that reported by official statistics according to which a fourth part of the labor force is income-related underemployed. To arrive to this conclusion, the wages of private salaried workers and public servants were estimated for both income-related underemployed for and not underemployed at all. The wage gap was estimated by means of the Mincer equation, the Blinder-Oaxaca decomposition and the approach of Ñopo (2008). The results show a wage gap between 40% and 44% but the unexplained component is much smaller (between 36% and 40% of it). Although some underemployed might have reasons to be regarded as such, we provide evidence in the sense that the higher portion of the gap is explained by human capital variables and other controls. The differential is more neatly observed in the higher part of the wage distribution (the higher the age and schooling, the higher the unexplained component of it) and in the sectors of mines, transport and building.

Income-related Underemployment and Labor Market Performance in Colombia [Subempleo por ingresos y funcionamiento del mercado de trabajo en Colombia]