The trade-offs of social assistance programs in the labor market: The case of the “Seguro Popular” program in Mexico
AbstractIn 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.
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Bibliographic InfoPaper provided by El Colegio de México, Centro de Estudios Económicos in its series Serie documentos de trabajo del Centro de Estudios Económicos with number 2010-12.
Date of creation: Oct 2010
Date of revision:
social assistance program; informality; labor market; Mexico;
Find related papers by JEL classification:
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-16 (All new papers)
- NEP-DEV-2011-01-16 (Development)
- NEP-LAB-2011-01-16 (Labour Economics)
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"Effects of Colombia's Social Protection System on Workers' Choice between Formal and Informal Employment,"
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