The trade-offs of social assistance programs in the labor market: The case of the “Seguro Popular” program in Mexico

In 2002, the Mexican government began a tremendous financial effort to provide health insurance, Seguro Popular (SP), to the 50 million uninsured in Mexico. In doing so, the states and municipalities offered virtually free health insurance to uncovered self-employed and informal salaried workers substantially altering the incentives for workers and firms to operate in the formal economy. We take advantage of the staggered implementation of the program across municipalities to estimate the effects of the SP in the labor market. We find that the SP had a negative effect in the creation of formal jobs, especially in small and medium sized firms. According to our estimates, had the program not been in place, 31.000 more employers and 300.000 new formal jobs should have been registered with Mexican social security. These represent 3.8% and 2.4% of the stock of registered employers and employees in 2002 when the program started.social assistance program, informality, labor market, Mexico

Self-Selection Patterns among Return Migrants: Mexico 1990-2010

This paper analyzes the self-selection patterns among Mexican return migrants during the period from 1990 to 2010. Using census data, we can identify return migrants who have lived in the United States within the previous 5 years but who currently live in Mexico. To calculate the selection patterns, we non parametrically estimate the counterfactual wages that the return migrants would have experienced had they never migrated by using the wage structure of non migrants. We find evidence that the selection patterns change over time toward negative selection. For example, in 1990, the wages that the male return migrants would have experienced had they not migrated was 6 percent larger than the wages of male non migrants. However, by 2010, the difference had declined to -14 percent. The increasing negativity of the degree of selection is robust to the analysis of specific subgroups: rural and urban, men and women, and states with high migration rates and low migration rates. Moreover, the negative selection results for the period from 2000 to 2010 are robust to the use of different surveys that define a return migrant by using distinct characteristics. Additionally, we observe that the wages of return migrants are larger than those that the migrants would have obtained had they not migrated. This finding shows that migration has a positive effect on the Mexican economy.Mexican migration, self-selection, return migration, wages

Social protection programs and employment: The case of Mexico’s “Seguro Popular” program

Mexico created Seguro Popular in 2002 with the goal of providing free or subsidized health insurance coverage to 47 million uninsured people by the year 2013. Only individuals lacking the social security protections granted to all formal sector workers and their families are eligible. Hence, one unintended consequence of the program could be an increase in the size of the informal sector. The introduction of the Seguro Popular program was conducted in stages, across municipalities and time. We exploit this variation and implement a differences-in-differences approach in order to identify the causal effect of the program in formal employment outcomes. We analyze the effect of Seguro Popular using 33 large and relatively rich cities from labor force surveys conducted from 2001 to 2004. In order to measure the effect for poorer municipalities, we also use the individual-level Oportunidades dataset that covers 136 municipalities from 2002 to 2004. We find little evidence of any correlation between Seguro Popular and the decision of workers to be employed in the formal or informal sector. One possible explanation of our findings is the low enrollment of the Seguro Popular program during the period we study. We provide suggestive evidence from the 33 cities that the result holds for the 2005 to 2006 period as well. We conclude that the recent increase in informal employment in Mexico is due to other causes.Mexico, informality, employment

Did population well-being improve during Porfirian Mexico? An approximation using a Quasi-Index of human development

It is argued that economic growth during the Porfiriato did not improve the well-being of Mexican population. One explanation for such result is that economic growth pattern was skewed and benefited more the northern states and less the southern ones. Following the estimation method of the Human Development Index (HDI), we calculate a Human Development Quasi-Index for the Mexican states during the period 1895-1910. Results show that starting the period (1895) the northern states were already the most developed. During the next 15 year this pattern was maintained and the dispersion in human development increased marginally. Finally, it is shown that the true losers of Porfiriato were the states surrounding Mexico City and not the southern ones.human development, well-being, Mexico, Porfiriato

Labor supply of married women in Mexico: 1990-2000

In the last couple of decades, and in particular during the last couple of administrations, the Mexican government has implemented various social programs targeted specifically to women, such as PROGRESA/Oportunidades, a child care program, and a gender equality program (PROIGUALDAD). The impact that those programs may have on the work behavior of women largely depends on the form that the female labor supply takes, and in particular, on the labor supply elasticities with respect to own wages, and the husband’s wages. Despite this fact, the literature on female labor supply in Mexico is very scarce. To our knowledge, there is no estimate of the female labor supply elasticities at the national level. This paper fills in this gap in the literature. Using data from the 1990 and 2000 Mexican Census of Population, we estimate a structural model of labor supply through an application of Wooldridge’s (2002) threestep procedure. We …nd that the female labor supply elasticities had a rather sharp decrease between 1990 and 2000, which suggests that women are getting increasingly attached to the labor market. We also find evidence of heterogenous effects for women with young children and women of different cohorts. Even though female are now less responsive to changes in wages, the elasticities that we …nd are still large enough so that social programs aimed at modifying females´ work behavior through incentives might still be very successful.wage inequality, Mexico, labor supply, employment, married women

Teenage Pregnancy in Mexico: Evolution and Consequences

We analyze the consequences of a teenage pregnancy event in the short- and long-run in Mexico. Using longitudinal and cross-section data, we match females who got pregnant and those that did not based on a propensity score. Several balancing tests and specifications indicate that the main assumptions to estimate the average treatment effect on the treated using a propensity score are satisfied. In the short-run, we find that a teenage pregnancy causes a decrease of 0.6-0.8 years of schooling, lower attendance to school, less hours of work and a higher marriage rate. At the household level, we do not find any effect in parental hours of work or income per capita. In the long-run, we find a loss in years of education of 1-1.2 and a higher probability of being married, but also higher probability of being separated or divorced. We also find that household income per capita is lower at least in the long-run.teenage, pregnancy, labor outcomes, propensity score, matching

The Rise and Fall of Income Inequality in Mexico: 1989-2010

Inequality in Mexico rose between 1989 and 1994 and declined between 1994 and 2010. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the ‘re-centered influence function’ method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-1994) due to institutional factors and labor demand. Returns declined (1994-2006) due to changes in supply and --to a lesser extent--in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000.inequality, wages, disposable income, labor markets, Mexico

Why did wage inequality decrease in Mexico after NAFTA?

Contrary to what happened before NAFTA, wage inequality in Mexico decreased after 1994. This paper investigates the forces behind the post NAFTA decrease in wage inequality. Using a quantile decomposition, I show that the decline in wage inequality is driven by a decline in the returns to education and potential experience, especially at the top of the wage distribution. Supply and demand are the main contributors for this change. On the supply side, there were substantial increases in college enrollment rates after 1994, which translated into an increase in the proportion of workers with a college degree. However, this increase in supply was not met by an increase in demand for the highly educated: the proportion of the workforce in top qualified occupations and close to the top occupations did not increase as much as the increase in supply. As a result, college educated workers put wage pressures in top and less than top qualified occupations. A Bound and Johnson (1992) decomposition confirms that changes in relative supply are the main determinant behind the decrease in wage inequality.wage inequality, Mexico, education, employment

Family Income Inequality and the Role of Wives Earnings in Mexico: 1988-2010

We study family income inequality in Mexico from 1988 to 2010. Female labor supply increased during this period, especially for married women. The share of wives’ income among married couples grew from 13 percent in 1988 to 23 percent in 2010. However, the correlation of husbands’ and wives’ earnings has been fairly stable with a value close to 0.28, one of the highest correlations recorded across countries. We follow Cancian and Reed’s (1999) methodology in order to analyze whether wives’ income equalizes total family income distribution. We investigate several counterfactuals and conclude that the recent increment in female employment has contributed to a decrease in family income inequality mainly through a rise in wives’ labor supply in poor families.income inequality, female employment, female earnings, Latin America, Mexico

Do labour market conditions affect the extent of gender discrimination?

The market environment in which discriminatory firms operate may be a relevant determinant of their extent of discrimination. In this paper we aim at analysing the effect of local labour market conditions on a firm's decision to discriminate. We use a direct measure of discrimination using online job advertisements which use ascriptive characteristics (such as gender, age, marital status or even physique) to describe their ideal candidates, to which we will refer as explicit discrimination. In theory, the effect of the unemployment rate on discrimination is ambiguous. Using data from over 300,000 online job ads, we find suggestive, though not definitive, evidence that firms explicitly discriminate more when the unemployment rate is higher: a percentage point increase in the unemployment rate is correlated with a 0.7 percentage point increase in the probability that an ad is targeted. We also found that in slack labour markets, firms tend to target their ads to men more often than in tight labour markets. However, as the unemployment rate increases firms discriminate less on the basis of beauty