Self-Employment and Conflict in Colombia

Year: 2010 HiCN Working Paper No. 082

Many Colombians are confronted with the ongoing conflict which influences their decision making in everyday life, including their behaviour on labour markets. This study focuses on the impact of violent conflict on self-employment, enlarging the usual determinants by 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 on 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 at the community of origin reduces self-employment while a high influx of displaced increases the probability of self-employment at the municipality of destination.