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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: https://cee.colmex.mx/dts/2010/DT-2010-12.pdf
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    References listed on IDEAS

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    1. Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2009. "Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program," American Economic Journal: Applied Economics, American Economic Association, vol. 1(4), pages 109-139, October.
    2. Santiago Levy & Michael Walton, 2009. "No Growth without Equity? Inequality, Interests, and Competition in Mexico," World Bank Publications - Books, The World Bank Group, number 13263, April.
    3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    4. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," The World Bank Economic Review, World Bank, vol. 13(2), pages 275-302, May.
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    Keywords

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    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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