Formal Labor Market Dynamics and Development

Anne Brockmeyer, Francois Gerard, Gabriel Ulyssea, Linda Wu, Marcelo Bergolo, Rodrigo Ceni González, Bernard Kirui, Andrea Lopez-Luzuriaga, Leonardo Fabio Morales, Andrea Otero-Cortes, Nadine Riedel, Matias Tapia, Tanisa Tawichsri and Verena Wiedemann

Borradores de Economia from Banco de la Republica de Colombia

Abstract: This paper studies formal employment dynamics using linked employer–employee data from eight countries spanning a wide income range from Kenya to Chile. First, we show that formality rates increase with development, both between and within countries, because more workers enter the formal sector, not because they spend more time in formal jobs. Second, formal labor market fluidity increases with development, as workers hold more formal jobs, spend less time in each job, and less time between jobs. Third, greater fluidity is associated with higher life-cycle wage growth, which is largely accounted for by within- rather than between-firm wage gains. *** RESUMEN: Este documento estudia las dinámicas del empleo formal utilizando datos pareados empleador–empleado de ocho países que abarcan un amplio rango de niveles de desarrollo, desde Kenia hasta Chile. Primero, mostramos que las tasas de formalidad aumentan con el desarrollo, tanto entre países como al interior de ellos. Este resultado se da porque hay más trabajadores ingresando al sector formal y no porque pasen más tiempo en empleos formales. Segundo, a medida que las economías se desarrollan, el mercado laboral formal se vuelve más fluido: los trabajadores pasan por un mayor número de empleos formales, permanecen menos tiempo en cada uno y transitan más rápidamente entre un empleo formal a otro. Tercero, una mayor fluidez está asociada con un mayor crecimiento salarial para el trabajador a lo largo del ciclo de vida. Este aumento se explica principalmente por incrementos salariales dentro de las empresas, más que por ganancias obtenidas al cambiar de empleador.

Keywords: Empleo formal; Fluidez del Mercado laboral; Salarios en el ciclo de vida; informalidad; desarrollo economico; Formal Employment; Labor Market Fluidity; Life-cycle wage growth; Informality; Development (search for similar items in EconPapers)
JEL-codes: J21 J31 J62 O11 O17 (search for similar items in EconPapers)
Pages: 44
Date: 2026-08
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https://repositorio.banrep.gov.co/bitstream/handle ... 34/11412/be_1362.pdf (application/pdf)

Related works:
Working Paper: Formal Labor Market Dynamics and Development (2026)
Working Paper: Formal Labor Market Dynamics and Development (2026)
Working Paper: Formal Labor Market Dynamics and Development (2026)
Working Paper: Formal Labor Market Dynamics and Development (2026)
Working Paper: Formal Labor Market Dynamics and Development (2026)
Working Paper: Formal Labor Market Dynamics and Development (2026)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:1362

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