as a mechanism for smoothing consumption and providing social assistance, than as one for promoting a more efficient labor market. In the following sections, we present the empirical characteristics of the Colombian labor market and those of the unemployment program evaluated. We then present the evaluation of the program, including the program’s targeting, the data used, the outcomes, the identification strategy, and the results of our estimates. Finally, we discuss the results and conclude.
2. Characteristics of the Colombian Labor Market 2.1 Historical Fluctuations in Colombia’s Unemployment Rate Since the early 1980s, the Colombian urban unemployment rate has experienced two important peaks: during the mid-1980s and between 1999 and 2000. Figure 1 illustrates the evolution of the quarterly unemployment rate. This information is available for the seven largest metropolitan areas since 1984 and for the 13 main metropolitan areas (MAs) since 2001. 4 The figure shows that when both series became available, the unemployment rates in the two series were very similar. This suggests that both the level and the changes in unemployment are similar among Colombia’s urban areas. During the late 1990s, the unemployment rate peaked at the height of the economic crisis, when it nearly doubled from about 9.5 percent in 1996 to more than 18 percent by 1999. For some demographic groups, the unemployment rate exceeded 20 percent. Figure 1. Evolution of Colombian Urban Unemployment Rate in Seven and 13 MAs 21% 19% 17% 15% 13% 11% 9%
7 Metropolitan Areas
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
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1984
7%
13 Metropolitan Areas
Source: López (2010). Seasonally adjusted series. 4
The seven main metropolitan areas ( MA) are Medellin, Cali, Bogota, Bucaramanga, Barranquilla, Manizales, and Pasto. The 13 main MAs include these seven plus Cucuta, Villavicencio, Pereira, Ibague, Monteria and Cartagena.
4