Carlos Medina**
cmedindu@banrep.gov.co

José Escobar***
jescobre@banrep.gov.co

Abstract

We estimate the effect on hourly wages and hours of work, of an increase in the number of hours of work, defined by law as daytime hours of work. To identify the parameter of interest, we estimate difference in difference models. Although we do not know the working hour schedule; we exploit the necessary conditions for the intervention to affect them, to define treatment and comparison groups. We find that wages of males older than 25 working in industry in metropolitan areas decreased more than 11% due to the reform, while females older than 25 working in industry in metropolitan areas reduced their hours of work per week in 3.6 hours. There is evidence, although weaker, of increases in hourly wages for male workers in the other sectors of the economy. This suggests that employers increased labor demand in those sectors. Overall, the reform would have had positive effects on all workers but those in industry.

Labor Reform, Labor Market Regulation, Difference in Difference Models, Labor Supply, Labor Demand.

K31, J20, J30

*The opinions expressed here are those of the authors and not necessarily of the Banco de la República (Central Bank of Colombia) nor of its Board of Directors. We thank assistants of the seminars organized by the Banco de la República in Bogotá and Medellín for their helpful comments. Any remaining errors are our own.

** Researcher, Banco de la República cmedindu@banrep.gov.co

*** Junior Researcher, Banco de la República jescobre@banrep.gov.co