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

Author

Listed:
  • 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.

Suggested Citation

  • Mariano Bosch & Raymundo M. Campos-Vázquez, 2010. "The trade-offs of social assistance programs in the labor market: The case of the “Seguro Popular” program in Mexico," Serie documentos de trabajo del Centro de Estudios Económicos 2010-12, El Colegio de México, Centro de Estudios Económicos.
  • Handle: RePEc:emx:ceedoc:2010-12
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    File URL: http://cee.colmex.mx/documentos/documentos-de-trabajo/2010/dt201012.pdf
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    Cited by:

    1. 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.
    2. Matías Busso & Maria Victoria Fazio & Santiago Levy Algazi, 2012. "(In)Formal and (Un)Productive: The Productivity Costs of Excessive Informality in Mexico," IDB Publications (Working Papers) 4047, Inter-American Development Bank.
    3. Azuara, Oliver, 2011. "Effect of universal health coverage on marriage, cohabitation and labor force participation," MPRA Paper 35074, University Library of Munich, Germany.
    4. Raymundo M. Campos-Vázquez & Melissa A. Knox, 2013. "Social Protection Programs and Employment: The Case of Mexico's Seguro Popular Program," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 403-448, July-Dece.
    5. Adriana Camacho & Emily Conover & Alejandro Hoyos, 2014. "Effects of Colombia's Social Protection System on Workers' Choice between Formal and Informal Employment," World Bank Economic Review, World Bank Group, vol. 28(3), pages 446-466.
    6. Antón, Arturo & Boyd, Roy & Elizondo, Alejandra & Ibarrarán, María Eugenia, 2016. "Universal social insurance for Mexico: Modeling of a financing scheme," Economic Modelling, Elsevier, vol. 52(PB), pages 838-850.
    7. Garganta, Santiago & Gasparini, Leonardo, 2015. "The impact of a social program on labor informality: The case of AUH in Argentina," Journal of Development Economics, Elsevier, vol. 115(C), pages 99-110.
    8. Pfutze, Tobias, 2014. "The Effects of Mexico’s Seguro Popular Health Insurance on Infant Mortality: An Estimation with Selection on the Outcome Variable," World Development, Elsevier, vol. 59(C), pages 475-486.
    9. Wagstaff, Adam & Manachotphong, Wanwiphang, 2012. "The health effects of universal health care : evidence from Thailand," Policy Research Working Paper Series 6119, The World Bank.
    10. Francesca Castellani & Eduardo Lora, 2014. "Is Entrepreneurship a Channel of Social Mobility in Latin America?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(2), pages 179-194, November.
    11. Bosch, Mariano & Manacorda, Marco, 2012. "Social policies and labor market outcomes in Latin America and the Caribbean: a review of the existing evidence," LSE Research Online Documents on Economics 58003, London School of Economics and Political Science, LSE Library.
    12. Guillermo Cruces & Marcelo Bérgolo, 2013. "Informality and Contributory and Non-Contributory Programmes. Recent Reforms of the Social-Protection System in Uruguay," Development Policy Review, Overseas Development Institute, vol. 31(5), pages 531-551, September.
    13. Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
    14. 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).

    More about this item

    Keywords

    social assistance program; informality; labor market; Mexico;

    JEL classification:

    • O12 - Economic Development, Innovation, 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, Innovation, 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, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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