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Labor Market Reforms and Their Impact over Formal Labor Demand and Job Market Turnover The Case of Peru Jaime Saavedra and Máximo Torero Jaime Saavedra is executive director and senior researcher at the Grupo de Análisis para el Desarrollo. Máximo Torero is senior researcher at the same institution. This project was undertaken as part of the IADB Research Network. We thank the staff of the Ministry of Labor of Peru for helping us in handling the data used for the labor demand estimations. We owe a great debt to Daniel Hamermesh, James Heckman, and Carmen Pagés

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world of school to the world of work and moving from their parental families to living on their own. In the 1970s the labor market situation of youths worsened noticeably, apparently because of the huge increase in supply resulting from the entry of baby boomers into the job market (Freeman 1979; Welch 1979; Berger 1984). Most analysts expected that the deteriorated position of youths in the job market would improve as baby boomers aged and as the youth David G. Blanchflower is professor in and chairman of the Department of Economics at Dartmouth College and a


Contents vii Acknowledgments ix Introduction 1 James J. Heckman and Carmen Pagés 1. Measuring the Impact of Minimum Wages: Evidence from Latin America 109 William F. Maloney and Jairo Nuñez Mendez 2. Labor Market Reforms and Their Impact over Formal Labor Demand and Job Market Turnover: The Case of Peru 131 Jaime Saavedra and Máximo Torero 3. The Effect of Job Security Regulations on Labor Market Flexibility: Evidence from the Colombian Labor Market Reform 183 Adriana D. Kugler 4. Determinants of Labor Demand in Colombia: 1976–1996 229 Mauricio Cárdenas and

country’s built resources is its physical infrastruc- ture. Map 16.1 shows the distribution of built resources around the world in terms of the road density of a country, measured as kilometers of roads per square kilometer of land area. Where the road network is small and in poor condition, many people may live in isolation from jobs, markets, and public services like education and health care. Such isolation is likely to contribute to poverty and hunger. Be that as it may, map 16.1 and fi gure 16.1 show little direct relationship between hunger and built

- The Declining Economic Status of Young Workers in OECD Countries David G. Blanchflower and Richard B. Freeman Throughout the OECD, young people had greater problems in the job market in the 1990s than in earlier decades. In some countries, this shows up in relatively high unemployment rates and low rates of employment to population. In other countries it takes the form largely of reduced wages for young workers. The worsened job market for the young occurred de- spite three trends favorable to them: a demographically induced decline in their relative