Labour participation in Colombia

Abstract

A model is estimated for the decision of participating in the labour market for different groups of household members: not coupled (single, divorced and widow) women and men and coupled (married and in permanent union) women and men. The differences among these groups are significant. Probit models are estimated for the period 1984 : 1–2000 : 4 using the National Housing Survey. The neoclassical static model performs fairly well in describing the empirical determinants of the decision of participating. In terms of sign and significance of estimated coefficients the best performance of the model is reached for women. In terms of prediction the model proves useful for not coupled persons. Except for the variable named ‘children aged less than six years’, all variables perform well.

Acknowledgements

The opinions expressed here are those of the authors and do not necessarily correspond to those of the Banco de la República (the Colombian Central Bank) nor of its Board. We thank Luis F. Melo, Gerson J. Pérez, Donald Robbins, Jaime Tenjo for their comments and suggestions, and the assistants to the seminars at Banco de la República, CEDE, FEDESARROLLO and Universidad Javeriana. The usual disclaimers apply.

Notes

The five stages (quarters) which were not taken into account for the econometric exercises are 104, 106, 107, 108 and 110, corresponding, respectively, to 1999:2, 1999:4, 2000:1, 2000:2 and 2000:4, because of some information problems with a variable fundamental to the explanations.

Support for this kind of behaviour is found in Gronau (1973, p. 175): ‘A woman's labour supply is the mirror image of her derived demand for time at home…’.

A similar version of this model can be found in Borjas (2000), Kaufman and Hotchkiss (2000) and Deaton and Muellbauer (1980, chapter 11) among many others. An intertemporal version can be found in Gronau (1973), Pencavel (1986) and Killingsworth and Heckman (1986). These authors consider that the model is useful mainly to explain the decisions of participating or not in the labour market for members of the household classified as secondary workers. An example are the married women. See Tenjo and Ribero (1998) for an application of the static model for Colombia.

The hypothesis on income pooling is still under debate. For a rejection of this hypothesis see Attanazio and Lechene (2002) applied to the Mexican programme called Progresa.

This constraint has not to do with search costs.

To illustrate this point, let us consider an utility function such as:

. In this case, Condition 6 collapses to

This variable gives evidence of the added worker effect.

According to the urban official classification system.

Mincer (1962) focused on female population.

The jumps of the average years of education about 1991 and 1992 seem to be associated to pure statistical phenomena.

The model has been estimated by quasi-maximum likelihood. The estimates of the rest of members of the households are not included for space reasons. However, they are available for the authors on request.