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Abstract
This paper studies how an institutional change such as the 2002 labor reform has an impact on Colombian labor demand, on the basis of panel data provided by the Annual Manufacturing Survey disaggregated at the 4-digit level of ISIC (International Standard Industrial Classification of all Economic Activities) for 2001-2006 and according to Hamermesh's (1993) theoretical formulations. The results of the econometric exercise are a short run employment- output elasticity of 0,57 and 0,61 for the long run and a -0,78 employment- wage elasticity on the short run and -0,98 on the long run. These results confirm the element shared by all empirical studies, which is that long run price elasticity of the factors is larger than short run price elasticity. The previous values show that the reform has adverse effects on job creation on the short run, while on the long run it has no effects at all on the manufacturing labor demand.
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