The people of Bogota : who they are, what they earn, where they live

The People of Bogota: Who They Are, What They Earn, Where They Live SWP390 World Bank Staff Working Paper No. 390 May 1980 Prepared by: Rakesh Mohan Economic and Regional Economics Division Development Economics Department Copyright 0 1980 The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. The views and interpretations in this document are those of theIf authors and should not be attributed to the World Bank, to its 5,* affiliated organizations, or to any individual acting in their behalf. F ILL C O py   The views and interpretations in this document are those of the author and should not be attributed to the World Bank, to its affiliated organizations, or to any individual acting in their behalf. WORLD BANK Staff Workine Paner No. 390 May 1980 THE PEOPLE OF BOGOTA: WHO THEY ARE, WHAT THEY EARN, WHERE THEY LIVE This report was prepared under the auspices of the City Study Research Project (RPO 671-47) as City Study Project Paper No. 6. It is being circulated to stimulate discussion and comment. An earlier version of this paper was presented as "Workers of Bogota: Who They Are, What They Do, and Where They Live" at the Southern Economic Association Meetings, Washington, D. C., November 10, 1978. Prepared by: Rakesh Mohan Urban and Regional Economics Division Development Economics Department Copyright @ 1980 The World Bank 1818 H Street, N.W. Washington, D.C. 20433, U.S.A.   ACKNOWLEDGEMENTS A rather large amount of data handling, documentation and preparation has gone into the work leading to this paper. I would like to thank Alan Carroll for the original cleaning and documentation of the 1975 and 1977 Household Surveys; Nelson Valverde for making the 1973 Population Census Sample ready for use; Mark Snyderman for the original cleaning and documentation of the 1972 Household Survey; the cleaning, deciphering and documentation of the 1970 Economic Census; and preparing the tabulations from the 1973 census; Kalpana Nandwani for preparing tabulations on firm size distributions from the 1970 Economic Census and the 1972 and 1975 Household Surveys; Nancy Hartline for wrestling with the 1977 Household Survey, preparing its final documen- tation, and putting the income imputing method into effect; and finally, Manfred Wilhelm Wagner-Luna for reworking all the 1973 census and 1975' and 1977 Surveys. His work has been much beyond the call of duty. I have also benefited from comments by Michael Beesley, Albert Berry, Francois Bourguignon, Gary Fields, Gregory Ingram, Bernardo Kugler, Alvaro Pachon, Jose Fernando Pineda, Mark Rosenzweig, Miguel Urrutia and Richard Webb on the earlier version of this paper. A special word of appreciation goes to the staff of DANE (the Colombian Statistical Office) for having painstakingly conducted all the surveys in Colombia and for making them available in almost raw form so readily.   ABSTRACT This paper describes the characteristics of the population of Bogota: who are the people, what are their characteristics, what they do and where do they live on the basis of a detailed examination of several primary data sources. It also places the development of Bogota in a historical and national context in order to provide a better understanding of currently existing patterns. Bogota has gone through a phase of extremely rapid urbanization over the past half century during which it has grown more than ten fold. The data on fertility rates, trends in the participation of women in the labor force and indications of a recent slow down in the rate of growth of Bogota suggest that the next decade will see Bogota growing much more slowly. The demographic structure of the city is much like that of other Latin American cities: it has a high pro- portion of women, as well as children under 15 years of age, the latter com- prising more than 40% of the population. Thus, the labor force of Bogota can be expected to continue to expand at high rates even after the population growth slows down. The city has a balanced economic structure which is not dominated by manufacturing, nor services nor administration, as it is in some other large cities of the world. As the city has grown and its area has grown, the largest growth in population has occurred in the outer rings, while the inner rings have not declined. Thus, Bogota now has high density all over except in the outermost rings. Income varies much more by radial sectors than by rings: the poor in Bogota live in the Southern sector of the city and incomes increase roughly as one moves clockwise toward the North. Migrants in Bogota are not especially poor; they do not concentrate in specific areas of the city--the centre or the periphery; they are not con- centrated in particular occupations nor activities; they are not less educated nor less skilled than the natives. Such ideas are counter to the popular notion of poor migrants streaming into the city. Bogota is quite centralized in employment where the centre appears to have about a quarter of all employ- ment. The poor areas of the city have a net deficit of jobs as compared with residences while the rich North has a corresponding surplus. There is relatively little in-commuting to the South. People living in the poor South are, in that sense, spatially disadvantaged. The distinctions between the sectors become more apparent when the age-education-income profiles of workers are examined. As one would expect, people with less education have flatter income profiles than those with more. People in the poorer sectors have relatively flat income profiles and even people with higher education in these sectors earn less than those with similar levels of education in richer sectors. Workers with similar occupations and activity appear to receive different incomes according to sector of residence. Thus, it may be hypo- thesized that in addition to the standard earnings determinants, the place of residence in a city may have some bearing on a person's potential earnings. The paper also examines carefully the quality of the data sets used and technical appendices are provided on some problems in the use of primary data such as household surveys.   TABLE OF CONTENTS Page No. I. INTRODUCTION ................................................ 1 1.1 Context of this Study ...... ................ 1 1.2 Objectives ..................................... 1 1.3 Summary of the Paper ........................... .,. 4 1.4 A Reader's Guide ....... ................. 8 II. BOGOTA IN THE NATIONAL URBAN CONTEXT ........................ 10 III. THE DATA ..................................................... 21 3.1 1970 Economic Census .................. ................ 21 3.2 1973 Population Census ............... .. ............... 21 3.3 Household Surveys ....... .............................. 24 3.4 Household Survey Samples and the Spatial Disaggregation of Bogota ............................................. 26 IV. POPULATION, DENSITY AND INCOME IN BOGOTA ......... .. ......... 29 4.1 Introduction .......................................... 29 4.2 Economic and Demographic Structure of the City ........ 35 4.3 The Spatial Distribution of Population and Density .... 41 4.4 The Spatial Distribution of Income .................... 48 4.5 Summary ............................................... 57 V. SOME SELECTED CHARACTERISTICS OF THE LABOR FORCE .... ........ 59 5.1 Distribution of Workers Between Small and Large Establishments ........................................ 59 5.2 Distribution of Primary and Secondary Workers .... ..... 63 5.3 Distribution of Workers According to Hours Worked ..... 65  Table of Contents (Cont'd) Page No. VI. THE SPATIAL DISTRIBUTION OF WORKERS IN BOGOTA . . ............. 69 6.1 The Distribution of Workers by Residence and Workplace 69 6.2 Migrant Status ........................................ 74 6.3 An Age-Education-Income Profile ....................... 82 6.4 A Profile of Workers by Occupation .................... 92 6.5 A Profile of Workers by Industry of Activity .... ...... 100 6.6 Summary ............................................... 106 VII. CONCLUSIONS ......................... ........................ 108 7.1 Data Problems ......................................... 108 7.2 The Course of Urbanization ............................ 110 7.3 The Changing Internal Structure of a City Undergoing Rapid Growth .111 7.4 Income Segregation in Bogota ..112 7.5 Migrants. 113 7.6 Segmentation ..114 APPENDIX 1. A Technical Note on the Calculation of Incomes 117 APPENDIX 2. The Coverage of Income in Bogota in the 1973 Population Census and the 1977 Household Survey 122 APPENDIX 3. The Population of Bogota and Its Spatial Distribution Within the City .126 APPENDIX 4. A Spatially Disaggregated Statistical Profile of the Labor Force in Bogota .130 BIBLIOGRAPHY ..150  LIST OF TABLES Table No. Page No. 2.la Population Size and Inter Censal Growth Rates .... ...... 13 2.lb Gross Domestic Product and Per Capita Product: Colombia and Bogota .13 2.2 Relative Rates of Growth of Population of the Thirty Largest Cities and Metropolitan Areas in Colombia by Size Class 1951-73 ........ ............................. 15 4.1 Population and Density of Bogota 1560 - 1978 .... ....... 30 4.2 Comparison of Bogota City Characteristics with Other Large Cities .......... ................................. 33 4.3 Participation Rates in Bogota Over Time .... ............ 37 4.4 Unemployment Rates in Bogota and Other Cities Over Time 37 4.5 Structure of Employment in Selected Cities and Bogota .. 39 4.6 The Structure of Production in Bogota, Jakarta, Calcutta 40 4.7 Growth of Population and Density in Bogota by Rings 1964-77 .47 4.8 Growth of Population and Density in Bogota by Sectors 1964-77 .47 4.9 Spatial Distribution of Population and Income by Rings . 52 4.10 Spatial Distribution of Population and Income by Sectors 53 5.1 Distribution of Workers by Size of Establishment 61 5.2 Distribution of Workers by Number of Hours Worked Weekly 1977 ........... .................................. 66 6.1 Spatial Distribution of Workers by Sector 1977 ......... 70 6.2 Distribution of Workers by Residence and Workplace; Bogota 1972 .72 6.3 Spatial Distribution of Workers by Zone of Origin and Destination 1972 .75 6.4 Distribution of Workers According to Migrant Status 76 6.5 Distribution of Workers by Length of Residence 78  List of Tables (Cont'd) Table No. Page No. 6.6 Spatial Distribution of Workers by Length of Residence (1977): Rings .79 6.7 Spatial Distribution of Workers by Length of Residence (1977): Sectors .81 6.8 Distribution of Workers by Age Groups .................. 83 6.9 Mean Earnings of Workers by Sex and Age Groups .... ..... 83 6.10 Distribution of Workers by Sex and Education Level 85 6.11 Mean Income of Workers by Sex and Education Level ...... 85 6.12 Distribution of Workers by Age and Education 1977 ...... 89 6.13 Distribution of Workers by Occupation ..... ............. 93 6.14 Spatial Concentration of Workers by Occupation .... ..... 95 6.15 Distribution of Workers by Activity ..... ............... 101 6.16 Spatial Concentration of Workers by Activity .... ....... 103  LIST OF FIGURES Figure No. Page No, 1 Variation of Income by Household Size ....................... 55 2 Distribution of Primary and Secondary Workers by Decile 64 3 An Age Education Income Profile of Bogota 1977 .87 4 An Age Education Income Profile by Sectors in Bogota 1977 91 5 Spatial Profile of Occupation and Income 1977 .... ........... 99 6 A Spatial Profile of Workers Income by Activity 1977 ........ 105  LIST OF MAPS Number Title Page No. 1 Colombia , ...................... 11 2 Bogota: Population by Comunas .42 3 Bogota: Population Density by Comunas .44 4 Bogota: Ring and Sector Systems Based on 1973 Comunas 46 5 Bogota: Mean Household Income Per Capita by Comunas *-.- 50 6 Mean Household Size by Comuna ..56 7 The Spatial Distribution of Occupations in Bogota . .97  I. INTRODUCTION 1.1 Context of This Study This paper forms part of a large program of research grouped under the rubric of the "City Study" of Bogota, Colombia, being conducted at the World Bank. The goal of the City Study is to increase our under- standing of the workings and interactions of five major urban sectors - housing, transport, employment location, labor markets and the public sector - so that the impacts of policies and projects in urban areas can be assessed more accurately. The study emphasizes the conditions of low income households in terms of employment opportunities, housing consumption and the level of public services available to them. The program of research has three distinct phases: description, hypothesis testing and estimation of behavioral parameters, and the development of policy impact models. This paper is the first of the labor market studies and forms part of the first phase - description - and will be followed by studies somewhat more analytical in nature. 1.2 Objectives The aim of this paper is to describe the characteristics of the population of Bogota: who are the people, what are their characteristics, what do they do and where do they live. It also attempts to place the development of Bogota in a historical and national context in order to provide a better understanding of currently existing patterns. Thus, it serves as an introduction to the city of Bogota and, in some sense, lays out some of the phenomena requiring explanation. As in the City Study as a whole particular attention is paid to spatial arrangements within the city. Do frictions of space matter in the workings of the urban labor market in a large city? There is currently a great amount of concern being  expressed by policy makers within developing countries on the size of their largest cities. It is therefore important to examine the state of income, employment and unemployment in these cities and to see if the "largeness" of the city matters. The study of labor markets in urban areas of less developed countries has essentially been conducted under the umbrella of three sets of distinct though related ideas. The first is a concern with the effects and causes of migration to urban areas and their respective consequences on labor markets at both the issuing and receiving ends.-/ The second set of studies explore the extent of the validity of the human capital model 2/ of labor earnings in developing countries.- The third set of studies re- flect a dualistic model of thinking where the urban labor market is looked at as being composed of formal and informal sectors.-/ The connecting thread between these three sets is an underlying preoccupation with the causes of poverty. A composite picture of the conclusions drawn from such work which may be characterized as currently received wisdom is as follows. The human capital model which essentially explains the variation in earnings by investments in education and on-the-job experience "works" but characteristically accounts for 30 to 45 percent of the observed variation of incomes in less developed countries. 1/ See, for example, Harris and Todaro (1970), Mazumdar (1976b) Todaro (1976a,b), Yap (1977). 2/ See, for example, Fields (1977, 1978), Jallade (1974),Psacharopoulos (1973). 3/ See Mazumdar (1976a), Joshi et al C1976), Lubell (1974), Merrick (1978), Sethuraman (1978).  -3- The rest is explained either by positing other systematic economic variables that are not easily measurable such as skill; or by positing structural imperfections which impede the functioning of the market, such as labor welfare regulations; or by positing the existence of merely stochastic processes which reward some and not others. The formal/informal sector proponents opt for the structural imperfection explanation and assert the existence of a "protected" sector which "artificially" keeps wages high in one sector and restricts entry to newcomers. Appeal is also made to the "experience" variable which suggests that the new entrants are migrants who are the least experienced in more ways than one. They therefore constitute a major part of the informal sector acquiring experience, skills and pass- ports to entry in the form of certification before they can penetrate the curtain of the protected sector. This paper finds merit in most of the above ideas but suggests that a further understanding of the operation of labor markets can only come through a more explicit recognition of heterogeneity in the characteristics of the labor force and, possibly, in the preferences of the constituents as well. This is an attempt to step back somewhat and explore descriptively further possibilities of taxonomy that might aid analysis of urban labor market behavior. The main additional dimension examined here is that of spatial differences within the urban area of a large city'. Are workers living in one part of a city disadvantaged (or advantaged) by virtue of their location? How homogeneous are different sectors of a city with respect to labor force characteristics? How useful is such a classification to understanding the operation of urban labor markets? In addition data sources  - 4 - are examined in some detail to comment on problems associated with i) the use of sample surveys of households for the purpose of drawing strong conclusions and ii) using a series of surveys for examining time trends. These problems are associated with the existence of systematic differences between different areas of a city and their changing character over time in a high growth situation. If the systematic differences are known, the drawing of a random stratified sample poses no problem: but if the sample itself is used to infer the existence of these differences then the problems posed begin to be more intractable. 1.3 Summary of the Paper Colombia has gone through a phase of extremely rapid urbanization over the past half century but is unusual among Latin American countries in that it has a relatively well articulated system of cities not entirely dominated by one large metropolitan city. Bogota itself has enjoyed a long period of uninterrupted growth and grown ten fold over the past fifty years. It is likely, however, that growth rates of Bogota and other large cities will continue their recent slow down and Bogota will not be as large in 1990 as had been expected in the past. Despite this long period of growth it appears that Bogota has kept a relatively stable gross density of population: it has expanded in area about as much as in population. Compared to other cities in the world, Bogota is relatively densely inhabited though less so than some Asian cities. The demographic structure of the city is much like that of other Latin American cities: it has a higher proportion of w'omen as well as children under 15 years of age, the latter comprising more than 40 percent  of the population. Thus we can expect the labour force in Bogota to con- tinue to expand at high rates even after the population growth rate slows down. In recent years, despite the expansion in the labour force, the measured unemployment rate has been declining to what might be called internationally acceptable rates. The city has a balanced economic structure which is not dominated by manufacturing nor services nor administration as it is in some other large cities in the world. As the city has grown and its area has expanded, the largest growth in population has occurred in the outer rings. The inner rings, however, have had a relatively stable population unlike North American central cities which have tended to lose population as they have decentralized. The result in Bogota is that it now has high density all over except in the outermost rings. The South of the city is much more densely populated as well as much poorer than the North. Given normal data sources it is difficult to arrive at a robust estimate of the proportions of workers working in small and large firms. Different data sources give inconsistent estimates. It can, however, safely be said that large manufacturing firms (those employing more than five employees) account for at least 50 percent of all manufacturing employment; large commerce firms for about 30 percent of commerce employ- ment and large service firms for about 30-45 percent. The inconsistencies between data sets point to the hazards of calculating the size of the "informal sector" which is usually said to comprise workers in the unorganized sector. Further it is found that a large majority of all workers falling in the bottom 30 percent by income rankings are male secondary workers or women--categories of workers usually assigned to  -6- the "informal sector." Underemployment is not as extensive as is often suspected: Not more than three or four percent of the workers are under- employed in the sense that they work fewer than 30 hours a week and would like more work, those working few hours and looking for extra work are predominantly construction or production workers and not workers in the service sector as may have been expected. Those in the service sector are over-represented in the over-worked low income category. The charac- teristics of the labour force are therefore so complex that it is difficult to easily delineate a sector which can then be termed an "informal sector." An examination of the distribution of workers by area of residence reveals some interesting patterns. Dividing Bogota into eight pie-slices or sectors, each of the eight sectors differed from the others according to the incomes of workers. Overall, women are found to earn about half as much as men but the ratio is somewhat higher in the poorer parts of the city. This is partly because a large proportion of the female labour force, almost a third, work as maids while there are few men in this low income occupation. It is also the case that there are few women in higher income occupations and those who are there earn proportionately less. Bogota is found to be quite centralized in employment: the center or central business district has about a quarter of all employment as com- pared to about 10 to 15 percent for a typical North American city. The density of employment in the center is very high but it then declines exponentially as one moves to the periphery. The poor areas of the city located mainly in the South have a net deficit of jobs as compared with residences while the rich North has a corresponding surplus. Consequently  -7- the poor South has very little in-commuting and is therefore somewhat delinked from the rest of the city. People living in the poor South are, in that sense, spatially disadvantaged. The distinctions between the sectors become more apparent when the age - education - income profiles of workers are examined. As one would expect, people with less education have flatter income profiles than those with more. But what is interesting is that the poorer sectors have relatively flat profiles and that even people with higher education in these sectors 'earn less than those with similar levels of education in the richer sectors. This provides further evidence that workers living in poorer sectors are disadvantaged. Whether residence in poor areas of the city causes or reinforces poverty is not tested here: only'the correla- tions are clear. Only a multivariate model framework could begin to disentangle the various effects on income. At this stage, the idea that place of residence has a bearing on potential earnings (or permanent income) remains a mere hypothesis, but one worth testing systematically. Migrants are found to be distributed uniformly all over: they are not over-represented in the periphery and only mildly so in the center. They are not found to be poorer either: indeed, recent immigrants appear to earn more than those of somewhat longer standing. Conventionally wisdom is therefore not supported on either of these points. Production workers are found to be among the least paid members of the labour force along with the low paid service workers, the variance of income being much higher among the latter. Thus the majority of production workers are found in the poorer sectors of the city. Workers with similar  -8- occupatiol,s and activity appear to receive different incomes according to sector of residence. Much attention is denoted in the paper to reliability of data. Emphasis is made on the point that data users should pay more attention to the mode of collection of the data and on the sampling frames used. Strong conclusions from single samples should be eschewed until corroborated from comparable data sources. 1.4 A Reader's Guide After this introduction, the next section puts Bogota in the national context and reviews in brief the urbanization experience of Colombia. The next section describes the data sources used in the paper and the basic spatial classification system used by these sources. Section IV gives a historical background to the development of Bogota and then examines the spatial distribution of population and income within the city. This section also discusses some of the sampling problems posed above in relation to observed differences in the incomes and population distributions over space and time periods in the city. The rest of the paper, in sections V and VI, then maps the characteristics of the labor force according to the standard classifications of age, sex, education, migrant status, occupation, activity, position in household and hours worked, but all disaggregated spatially. The firm size distribution divided between large (those employing more than 5 employees) and small firms is also examined in Section V. Information is also given on the comparative distribution of work and residence locations around the city.  - 9 - The mapping of such a profile necessitates the use of a rather large number of tables which can be tedious to digest. Graphical and map representa- tions are used wherever useful but many tables are presented here in order to highlight the variation or heterogeneity that exists in the labor force but which tends to get clouded by graphical representations or the estimation of equations. A more sophisticated approach would use analysis of variance or other similar techniques to characterize heterogeneity in a more summary and readily digestible manner. But I believe that the somewhat raw tables pre- sented here are essential for an appreciation of the texture of the pattern that exists. Finally, the concluding section generates hypotheses concerning the operation of the urban labor markets associated with the spatial structure of the city. Given the concern in this paper with data problems and the mechanics of data generation, three technical appendices are also included at the end. Appendix 1 outlines a method for imputing incomes to indi- viduals who do not provide income information--a problem encountered often in surveys and censuses. Appendix 2 illustrates how the coverage of personal income in a census or survey can be compared with national or regional income accounts: this is done for the 1973 and 1977 sources used. Appendix 3 outlines the method used for expanding the Population Census Sample Public Use Tape to obtain an estimate of the population of Bogota in 1973.  - 10 - II. BOGOTA IN THE NATIONAL URBAN CONTEXT This section attempts to place Bogota within a wider national context to set the stage for a study of income and employment within the city. Map 1 shows the location of Bogota within Colombia which is unusual among Latin American countries in that it has a well articulated system of cities. Bogota comprises only about 20 percent of the total urban population. Its primacy index-/ is the lowest among all countries in Latin America except for Brazil.- Thus, while Bogota is the dominant city in Colombia it is not as dominant as the largest cities in other Latin American cities. However, its share of both population as well as output as a proportion of the country has been increasing over the past few decades. Table (2.la) shows the growth rate of population in the country as a whole as well as for Bogota. It is clear from the table that the country has undergone a rather rapid process of urbanization during the past forty years. The period from 1951 to 1964 saw an especially rapid increase in population of the country as a whole as well as in the rate of urbanization. Within the space of forty years Colombia has gone from being a predominantly rural country to a predominantly urban one. In 1938 about 70 percent of the country's inhabitants lived in rural areas while now the proportions are almost reversed: in 1973 60 percent of the people lived in urban areas. In this process Bogota itself has increased its share of the population from under 4 percent to over 12 percent of the country as a whole. The city has had a sustained rate of populatton growth 1/ Ratio of the population of the largest city over the total urban population of the country. 2/ As computed by Renaud Ct979), p. 31.  7s8 761 74 72 OCTOBER 1976 _ ~~~~~~~~~~~COL OlA \ - IrA r L A Nv r c C C E A N UTHC -12 / 5/ <} \ ~~~~~~~~~~~~~~~~~~~~~~~SOUTH AMERICA , sma. Molt, \/8 ATTIAO >; , 7{3 /