COVID-19 and the Informality-driven Recovery: The Case of Colombia's Labor Market

Jorge Alvarez and Carlo Pizzinelli

No 2021/235, IMF Working Papers from International Monetary Fund

Abstract: This paper documents the impact of the COVID-19 pandemic and associated lockdowns on the Colombian labor market using household micro-data. About a quarter of employment was temporarily disrupted at the height of the first pandemic-induced lockdown in 2020. Women, the young, and the less educated were the most affected groups. Since then, a remarkable recovery, led by a rebound in informal employment, has taken place. By adjusting both employment levels and hours faster, the informal sector acted as an important margin of adjustment, particularly in those industries most affected by the first lockdown. The informal sector also appears to have played a role in decreasing the sensitivity of aggregate employment to more recent lockdowns in 2021, as the economy has learned to cope with pandemic restrictions, although the possibility of higher informality rates becoming embedded remains an substantial downside risk for long-term productivity.

Keywords: Colombia; COVID-19; Labor Markets; Informality.; A. informality adjustment margin; offsetting policy; pandemic-induced lockdown; impact of the COVID-19 pandemic; informality-driven recovery; Employment; Informal employment; Labor force; Unemployment; Caribbean (search for similar items in EconPapers)
Pages: 29
Date: 2021-09-17
New Economics Papers: this item is included in nep-iue, nep-lab and nep-lam
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Citations: View citations in EconPapers (4)

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