Self-Employment and Conflict in Colombia

Abstract

Many Colombians are confronted with the ongoing conflict that influences their decision making in everyday life, including their behavior in labor markets. This study focuses on the impact of violent conflict on self-employment, enlarging the usual determinants with a set of conflict variables. In order to estimate the effect of conflict on self-employment, we employ fixed effects estimation. Three datasets are combined for estimation: the Familias en Acción dataset delivers information about individuals, a second dataset contains different indicators of the Colombian conflict at the municipality level and the third dataset includes taxes to measure a municipality's economic situation. Our results show that high homicide and displacement rates in the community of origin reduces self-employment, while a high influx of displaced increases the probability of self-employment in the destination municipality.