Technical instruments and conceptual definitions : theoretical and practical implications of the change on the definition of unemployment in Colombia

Abstract

On June 2000 the Colombian National Department of Statistics (DANE) adopted a new definition to measure unemployment following standards suggested by the International Labour Organisation (ILO). The change of definition implied a reduction of the unemployment rate of about two percentual points. In this document we contrast the Colombian experience with another international experiences, and analyse the empirical and theoretical implications of this change of definition using two different kind of quantitative estimations: in the first one we contrast the main features of the different categories classified according to the old and new definition of unemployment (employed, unemployed and out of the labour force) using the EM algorithm; in the second one we test the implications of the ILO definition in terms of time expended on job-searching. We find empirical implications about structural unemployment and its relationship with the educational profile of unemployed people, and theoretical features that challenge the standards of the ILO’s unemployment definition.