IDEAS home Printed from https://ideas.repec.org/a/elt/journl/v74y2007i295p491-540.html
   My bibliography  Save this article

¿Pueden los programas sociales disminuir la productividad y el crecimiento económico? Una hipótesis para México

Author

Listed:
  • Levy, Santiago

Abstract

Social programs can reduce productivity and growth as they inadvertently generate perverse incentives for workers and firms. The core hypothesis is that these programs segment the labor market, tax formal salaried employment and subsidize informal salaried and non-salaried employment. Larger than optimal self-employment and employment by informal firms lowers aggregate labor productivity. In turn, differences in the cost of labor produce differences in returns to capital across firms, some formal legally hiring salaried workers and some informal illegally hiring salaried workers. Given the cost of credit, higher labor costs for formal firms distort the allocation of investment in favor of the informal sector; this investment is distributed in many small firms that may fail to exploit advantages of size as a result of firms’ strategies to evade social security contributions. This lowers the average productivity of capital causing dynamic productivity losses. The analytical argument is linked to empirical evidence indicating that differences in labor and capital productivity between sectors and firms contribute to explain differences in productivity growth across countries, on one hand; and to evidence suggesting a negative association between productivity and informality, on the other. A subsidiary hypothesis is that social programs are partly financed by reducing public investment rather than raising taxes, limiting the expansion of growth-promoting public infrastructure. The paper suggests that social programs that lower total factor productivity together with the effects of lower public investment partly account for Mexico’s lackluster growth and productivity performance in the context of intensified international competition and the erosion of the advantages of the North American Free Trade Agreement.// Los programas sociales pueden disminuir la productividad y el crecimiento económico al generar inadvertidamente incentivos perversos para los trabajadores y las empresas. La hipótesis central es que estos programas segmentan el mercado de trabajo, gravan al empleo formal asalariado y no asalariado. El autoempleo y el empleo de empresas informales que son mayores del óptimo disminuyen la productividad agregada del trabajo. A su vez, las diferencias en el costo del trabajo producen diferencias en los rendimientos del capital entre empresas: algunas de las empresas formales contratan legalmente trabajadores asalariados y algunas de las empresas informales contratan ilegalmente trabajadores asalariados. Dado el costo del crédito, los mayores costos del trabajo para las empresas formales distorsionan la asignación de la inversión en favor del sector informal; esta inversión se distribuye entre muchas empresas pequeñas que podrían desaprovechar las ventajas del tamaño como resultado de sus estrategias para evadir las contribuciones a la seguridad social. Esto disminuye la productividad media del capital, provocando pérdidas de la productividad dinámica. El argumento analítico se vincula, por una parte, a los datos empíricos indicativos de que las diferencias de la productividad del trabajo y del capital, entre sectores y empresas, contribuyen a explicar las diferencias observadas entre los países respecto al crecimiento de la productividad y por otra parte, a datos que sugieren una asociación negativa entre la productividad y la informalidad. Una hipótesis subsidiaria es que los programas sociales se financian en parte por la disminución de la inversión pública, en lugar de aumentar los impuestos, lo que limita la expansión de la infraestructura pública promotora del crecimiento económico. El ensayo sugiere que los programas sociales que disminuyen la productividad total de los factores, lo que se suma a los efectos de la menor inversión pública, explica en parte el crecimiento económico mediocre y el desempeño de la productividad en México en el contexto de la intensificada competencia internacional y la erosión de las ventajas del Tratado de Libre Comercio de América del Norte.

Suggested Citation

  • Levy, Santiago, 2007. "¿Pueden los programas sociales disminuir la productividad y el crecimiento económico? Una hipótesis para México," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(295), pages 491-540, julio-sep.
  • Handle: RePEc:elt:journl:v:74:y:2007:i:295:p:491-540
    DOI: http://dx.doi.org/10.20430/ete.v74i295.374
    as

    Download full text from publisher

    File URL: http://www.eltrimestreeconomico.com.mx/index.php/te/article/view/374/424
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gerardo Esquivel Hernández & Juan Luis Ordaz-Díaz, 2008. "¿Es la política social una causa de la informalidad en México?," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 1-32, May.
    2. Villa, Juan M., 2014. "Social transfers and growth: The missing evidence from luminosity data," WIDER Working Paper Series 090, World Institute for Development Economic Research (UNU-WIDER).
    3. Juan M. Villa, 2016. "Social Transfers and Growth: Evidence from Luminosity Data," Economic Development and Cultural Change, University of Chicago Press, vol. 65(1), pages 39-61.

    More about this item

    Keywords

    productividad; crecimiento económico; programas sociales;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:elt:journl:v:74:y:2007:i:295:p:491-540. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rosa María González Mejía). General contact details of provider: http://www.fondodeculturaeconomica.com/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.