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

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Author Info

  • Mariano Bosch

    ()
    (Universidad de Alicante)

  • Raymundo M. Campos-Vázquez

    ()
    (El Colegio de México)

Abstract

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.

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Bibliographic Info

Paper 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.

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Date of creation: Oct 2010
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Handle: RePEc:emx:ceedoc:2010-12

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Web page: http://www.colmex.mx/centros/cee/
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Keywords: social assistance program; informality; labor market; Mexico;

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Cited by:
  1. Camacho, Adriana & Conover, Emily & Hoyos, Alejandro, 2013. "Effects of Colombia's social protection system on workers'choice between formal and informal employment," Policy Research Working Paper Series 6564, The World Bank.
  2. François Gerard & Gustavo Gonzaga, 2013. "Informal Labor and the Cost of Social Programs: Evidence from 15 Years of Unemployment Insurance in Brazil," Textos para discussão 608, Department of Economics PUC-Rio (Brazil).
  3. Wagstaff, Adam & Manachotphong, Wanwiphang, 2012. "Universal health care and informal labor markets : the case of Thailand," Policy Research Working Paper Series 6116, The World Bank.
  4. Azuara, Oliver, 2011. "Effect of universal health coverage on marriage, cohabitation and labor force participation," MPRA Paper 35074, University Library of Munich, Germany.
  5. Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
  6. Wagstaff, Adam & Manachotphong, Wanwiphang, 2012. "The health effects of universal health care : evidence from Thailand," Policy Research Working Paper Series 6119, The World Bank.

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