Person:

Lora, Eduardo

Does economic prosperity in the Colombian Amazon require sacrificing the forest? This research compendium of a series of studies on the Colombian Amazon finds the answer to this question is no: the perceived trade-off between economic growth and forest protection is a false dichotomy. The drivers of deforestation and prosperity are distinct – as they happen in different places. Deforestation occurs at the agricultural frontier, in destroying some of the world’s most complex biodiversity by some of the least economically complex activities, particularly cattle-ranching. By contrast, the economic drivers in the Amazon are its urban areas often located far from the forest edge, including in non-forested piedmont regions. These cities offer greater economic complexity by accessing a wider range of productive capabilities in higher-income activities with little presence of those activities driving deforestation. Perhaps the most underappreciated facet of life in each of the three Amazonian regions studied, Caquetá, Guaviare, and Putumayo, is that the majority of people live in urban areas. This is a telling fact of economic geography: that even in the remote parts of the Amazon, people want to come together to live in densely populated areas. This corroborates the findings of our global research over the past two decades that prosperity results from expanding the productive capabilities available locally to diversify production to do more, and more complex, activities.

This paper presents a descriptive analysis of wage inequality in Colombia by cities and industries and attempts to evaluate the impact of the inequality of industries on inequality of cities. Using the 2104 Colombian Social Security data, we calculate the gini coefficient for cities and industries and draw comparisons between their distributions. Our results show that while cities are unequal in similar ways, industries differ widely on how unequal they can be with ginis. Moreover, industrial structure plays a significant role to determine city inequality. Industrial framework proves to be a key element in this area for researches and policymakers.

Labor informality, associated with low productivity and lack of access to social security services, dogs developing countries around the world. Rates of labor (in)formality, however, vary widely within countries. This paper presents a new stylized fact, namely the systematic positive relationship between the rate of labor formality and the working age population in cities. We hypothesize that this phenomenon occurs through the emergence of complex economic activities: as cities become larger, labor is allocated into increasingly complex industries as firms combine complementary capabilities derived from a more diverse pool of workers. Using data from Colombia, we use a network-based model to show that the technological proximity (derived from worker transitions between industry pairs) of current industries in a city to potential new complex industries governs the growth of the formal sector in the city. The mechanism proposed has robust strong predictive power, and fares better than alternative explanations of (in)formality.

This paper discusses the viability of three alternative pension systems for Latin America: full-capitalization, pay-as-you-go (PAYG) and notional account systems. Making use of a set of simulations, the pros and cons of each option are discussed for an “average” Latin American country. The results indicate that a system of individual notional accounts should be an attractive option, for several reasons. With contribution rates constant around 15 percent of wages, the system would be financially sustainable for the “average” Latin American country over the projection period (2015-2065), as it would generate surpluses until the early 2040s, which would be used to finance the subsequent deficit. The pay-as-you-go option (which, on average over the period would require approximately the same contribution effort) would imply frequent increases in contribution rates, which would be politically impracticable, and it would not create strong incentives for individuals to contribute as the notional accounts system. The full-capitalization system requires much lower contribution rates and may create the right incentives for workers to contribute but exposes them to high pension uncertainty. Furthermore, full-capitalization imposes a huge fiscal burden which, under most scenarios, could not be fully covered with the funds accumulated in the individual accounts, and would imply significant income redistribution from taxpayers to workers and pensioners and important transfers from the current to future generations.

Using panel data for workers who change jobs, changes in several labor outcomes after inter-city migration are estimated by comparing workers in similar circumstances who move to a new city –the treatment group—with those who stay in the same city –the control group. After matching the two groups using Mahalanobis distances over a wide range of covariates, the methodology of “difference-in-difference treatment effects on the treated” is used to estimate changes after migration. On average, migrants experience income gains but their dedication to formal employment becomes shorter. Income changes are very heterogeneous, with low-wage workers and those formerly employed by small firms experiencing larger and more sustained gains. The propensity to migrate by groups of sex, age, wage level, initial dedication, initial firm size, and size of the city of origin is significantly and directly correlated with the expected cumulative income gains of migration, and inversely with the uncertainty of such gains.

Este trabajo propone una metodología de descomposición estadística para describir en forma coherente las dimensiones del empleo femenino según la estructura del mercado laboral y según la estructura productiva de las ciudades. La metodología se utiliza para analizar el empleo femenino "pleno y decente” en 23 ciudades colombianas entre 2008 y 2016. Según la estructura laboral, se encuentra que la brecha de género en el empleo pleno y decente se debe a diferencias en la participación laboral y en la formalidad del empleo, más que a diferencias entre hombres y mujeres en el desempleo o en la dedicación al empleo. Según la estructura productiva, se encuentra que la orientación por sexo y la composición del empleo sectorial de las ciudades tienen influencia modesta en las diferencias entre ciudades en la generación de empleo femenino pleno y decente, ya que éstas resultan sobre todo de las diferencias en la capacidad de generación de para ambos sexos. La metodología también se usa para analizar los cambios en el período. Se sugieren posibles extensiones de la metodología propuesta e implicaciones para futuras investigaciones.

This paper proposes a methodology of statistical decomposition to describe in a coherent way the dimensions of female employment according to the structure of the labor market and according to the productive structure of cities. The methodology is used to analyze "full and decent" female employment in 23 Colombian cities between 2008 and 2016. According to the labor structure, it is found that the gender gap in full and decent employment is due to differences in labor participation and in the formality of employment, rather than differences between men and women in unemployment or dedication to employment. According to the productive structure, it is found that the orientation by sex and the composition of sectoral employment in cities have a modest influence on the differences between cities in the generation of full and decent female employment, since these are mainly the result of differences in cities’ capacities to generate employment for both sexes. The methodology is also used to analyze changes in the period. Potential extensions of the proposed methodology and implications for future research are suggested.

In this document we describe the size of the Poblacion Flotante of Bogota (D.C.). The Poblacion Flotante is composed by people who live outside Bogota (D.C.), but who rely on the city for performing their job. We estimate the Poblacion Flotante impact relying on a new data source provided by telecommunications operators in Colombia, which enables us to estimate how many people commute daily from every municipality of Colombia to a specifi c area of Bogota (D.C.). We estimate that the size of the Poblacion Flotante could represent a 5.4% increase of Bogota (D.C.)'s population. During weekdays, the commuters tend to visit the city center more.

Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations.

Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a priori a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.

Can “full and productive employment for all” be achieved by 2030 as envisaged by the United Nations Sustainable Development Goals? This paper assesses the issue for the largest 62 Colombian cities using social security administrative records between 2008 and 2015, which show that the larger the city, the higher its formal occupation rate. This is explained by the fact that formal employment creation is restricted by the availability of the diverse skills needed in complex sectors. Since skill accumulation is a gradual path-dependent process, future formal employment by city can be forecasted using either ordinary least square regression results or machine learning algorithms. The results show that the share of working population in formal employment will increase between 13 and nearly 32 percent points between 2015 and 2030, which is substantial but still insufficient to achieve the goal. Results are broadly consistent across methods for the larger cities, but not the smaller ones. For these, the machine learning method provides nuanced forecasts which may help further explorations into the relation between complexity and formal employment at the city level.