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The Trade-Offs of Welfare Policies in Labor Markets with Informal Jobs: The Case of the "Seguro Popular" Program in Mexico

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  • Mariano Bosch
  • Raymundo M. Campos-Vazquez

Abstract

In 2002, the Mexican government began an effort to improve health access to the 50 million uninsured in Mexico, a program known as Seguro Popular (SP). The SP offered virtually free health insurance to informal workers, altering the incentives to operate in the formal economy. We find that the SP program had a negative effect on the number of employers and employees formally registered in small and medium firms (up to 50 employees). Our results suggest that the positive gains of expanding health coverage should be weighed against the implications of the reallocation of labor away from the formal sector.

Suggested Citation

  • Mariano Bosch & Raymundo M. Campos-Vazquez, 2014. "The Trade-Offs of Welfare Policies in Labor Markets with Informal Jobs: The Case of the "Seguro Popular" Program in Mexico," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 71-99, November.
  • Handle: RePEc:aea:aejpol:v:6:y:2014:i:4:p:71-99 Note: DOI: 10.1257/pol.6.4.71
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. repec:iza:izawol:journl:y:2017:n:394 is not listed on IDEAS
    2. Gabriella Conti & Rita Ginja, 2017. "Who benefits from free health insurance: evidence from Mexico," IFS Working Papers W17/26, Institute for Fiscal Studies.
    3. Gerard, Francois & Gonzaga, Gustavo, 2016. "Informal Labor and the Efficiency Cost of Social Programs: Evidence from the Brazilian Unemployment Insurance Program," CEPR Discussion Papers 11485, C.E.P.R. Discussion Papers.
    4. Diether Beuermann & Camilo Pecha, 2016. "Healthy to Work: The Impact of Free Public Healthcare on Health Status and Labor Supply in Jamaica," IDB Publications (Working Papers) 96656, Inter-American Development Bank.
    5. Bergolo, Marcelo & Cruces, Guillermo, 2016. "The Anatomy of Behavioral Responses to Social Assistance When Informal Employment Is High," IZA Discussion Papers 10197, Institute for the Study of Labor (IZA).
    6. Bobba, Matteo & Flabbi, Luca & Levy Algazi, Santiago, 2017. "Labor Market Search, Informality and Schooling Investments," IZA Discussion Papers 11170, Institute for the Study of Labor (IZA).
    7. Orraca Romano, Pedro Paulo, 2016. "Essays on development and labour economics for Mexico," Economics PhD Theses 0816, Department of Economics, University of Sussex.
    8. Shiferaw, Admasu & Bedi, Arjun S. & Söderbom, Mans & Alemu, Getnet, 2017. "Social Insurance Reform and Labor Market Outcomes in Sub-Saharan Africa: Evidence from Ethiopia," IZA Discussion Papers 10903, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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