Social Security Distortions onto the Labor Market : Estimates for Colombia

Cuesta, Jose ; Olivera, Mauricio

关键词: ACCESS TO HEALTH CARE;    AGGREGATE DEMAND;    ARMED CONFLICT;    BASIC SANITATION;    BUSINESS FAILURE;   

DOI  :  10.1596/1813-9450-5390
RP-ID  :  WPS5390

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper identifies and quantifiesthree distortions caused by the existing social security andsocial assistance systems in Colombia. These distortionsrefer to the discrepancy between the cost of formal socialsecurity for the employer and the worker's valuation ofthe received service (social distortion): the differences insocial security benefits received by salaried andself-employed formal workers (occupational distortion); andthe discrepancy caused by the cost in employing a formalinstead of an informal worker (informal distortion). Basedon recently collected information concerning Colombianworkers' willingness to pay for several packages ofsocial security benefits, the study calculates that socialdistortions range from 2 to 27 percent of the workers'labor earnings; the occupational distortion amounts to 50percent of formal salaried workers' earnings; and theinformal distortions represent between 45 and 56 percent offormal workers' labor income. Results indicate thatvaluations of the contributive and noncontributiveprotection systems play a key role in explaining thesedistortions. In addition, the Colombian social protectionsystem thereby places a hefty tax on the formal worker (andemployer) while transferring resources to the informalworker, but these distortions are not sufficient to revertdifferentials in earnings among formal and informal workers.