Colombia | The reconfiguration of labor participation

Colombia's labor participation dropped from 68% to 64% in the last decade, driven by youth. This stems from two factors: more time spent studying (higher tertiary enrollment) and a smaller population share due to demographic aging. Higher inactivity due to studies boosts future human capital.

Key points

• Key points:
• Dual impact on youth: Of the 3.2 percentage point (pp) decline in the national labor force participation rate between 2015 and 2025, young people account for a 4.2 pp reduction—1.5 pp due to lower participation rates and 2.7 pp due to their shrinking demographic weight.
• Educational boom and public incentives: The rise in youth inactivity due to studies (+4 pp) coincided with growing higher education enrollment, fueled by access and tuition-free public policies such as Matrícula Cero, Generación E, and Puedo Estudiar.
• Persistent gender gap: Despite higher enrollment across both sexes, young women continue to record significantly higher labor inactivity rates, largely driven by the burden of unpaid domestic and care responsibilities.
• Buffer role of migration: The migrant population exhibits higher participation rates than non-migrants owing to a younger and more active demographic structure; however, accounting for only 4% of the working-age population (WAP), migration is insufficient to reverse the overall national downward trend.
• Short-term vs. long-term trade-off: Lower youth participation constrains immediate economic growth by reducing labor supply, but strengthens medium- and long-term human capital accumulation, provided quality and labor market relevance challenges are addressed.

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