Does Expanding Health Insurance Beyond Formal-Sector Workers Encourage Informality?: Measuring the Impact of Mexico's Seguro Popular
Seguro Popular (SP) was introduced in 2002 to provide health insurance to the 50 million Mexicans without Social Security. This paper tests whether the program has had unintended consequences, distorting workers' incentives to operate in the informal sector. The analysis examines the impact of SP on disaggregated labor market decisions, taking into account that program coverage depends not only on the individual's employment status, but also on that of other household members. The identification strategy relies on the variation in SP's rollout across municipalities and time, with the difference-in-difference estimation controlling for household fixed effects. The paper finds that SP lowers formality by 0.4-0.7 percentage points, with adjustments largely occurring within a few years of the program's introduction. Rather than encouraging exit from the formal sector, SP is associated with a 3.1 percentage point reduction (a 20 percent decline) in the inflow of workers into formality. Income effects are also apparent, with significantly decreased flows out of unemployment and lower labor force participation. The impact is larger for those with less education, in larger households, and with somebody else in the household guaranteeing Social Security coverage. However, workers pay for part of these benefits with lower wages in the informal sector.
|Date of creation:||Jul 2011|
|Date of revision:|
|Contact details of provider:|| Postal: 1300 New York Avenue, NW, Washington, DC 20577|
Web page: http://www.iadb.org/publications/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sosa-Rubí, Sandra G. & Galárraga, Omar & Harris, Jeffrey E., 2009.
"Heterogeneous impact of the "Seguro Popular" program on the utilization of obstetrical services in Mexico, 2001-2006: A multinomial probit model with a discrete endogenous variable,"
Journal of Health Economics,
Elsevier, vol. 28(1), pages 20-34, January.
- Sandra G. Sosa-Rubi & Omar Galarraga & Jeffrey E. Harris, 2007. "Heterogeneous Impact of the "Seguro Popular" Program on the Utilization of Obstetrical Services in Mexico, 2001-2006: A Multinomial Probit Model with a Discrete Endogenous Variable," NBER Working Papers 13498, National Bureau of Economic Research, Inc.
- 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.
- 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.
- Adriana Camacho & Emily Conover & Alejandro Hoyos, 2009. "Effects of Colombia's Social Protection System on Workers' Choice between Formal and Informal Employment," DOCUMENTOS CEDE 006003, UNIVERSIDAD DE LOS ANDES-CEDE.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002.
"How Much Should We Trust Differences-in-Differences Estimates?,"
NBER Working Papers
8841, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
- Carmen Pagés & Lucía Madrigal, 2008.
"Is Informality a Good Measure of Job Quality?: Evidence from Job Satisfaction Data,"
IDB Publications (Working Papers)
4122, Inter-American Development Bank.
- Carmen Pages & Lucia Madrigal, 2008. "Is Informality a Good Measure of Job Quality? Evidence from Job Satisfaction Data," Research Department Publications 4603, Inter-American Development Bank, Research Department.
- Raymundo M. Campos-Vázquez & Melissa A. Knox, 2010.
"Social protection programs and employment: The case of Mexico’s “Seguro Popular” program,"
Serie documentos de trabajo del Centro de Estudios Económicos
2010-14, El Colegio de México, Centro de Estudios Económicos.
- 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.
- Raymundo M. Campos-Vazquez & Melissa A. Knox, . "Social Protection Programs and Employment: The Case of Mexico's Seguro Popular Program," Working Papers UWEC-2011-10, University of Washington, Department of Economics.
- Mariano Bosch & William Maloney, 2006.
"Gross Worker Flows in the Presence of Informal Labor Markets. The Mexican Experience 1987-2002,"
CEP Discussion Papers
dp0753, Centre for Economic Performance, LSE.
- Mariano Bosch & William Maloney, 2006. "Gross worker flows in the presence of informal labor markets. The Mexican experience 1987-2002," LSE Research Online Documents on Economics 19798, London School of Economics and Political Science, LSE Library.
- Bosch, Mariano & Maloney, William, 2006. "Gross worker flows in the presence of informal labor markets : the Mexican experience 1987-2002," Policy Research Working Paper Series 3883, The World Bank.
- Leonardo Gasparini & Francisco Haimovich & Sergio Olivieri, 2007. "Labor Informality Effects of a Poverty-Alleviation Program," CEDLAS, Working Papers 0053, CEDLAS, Universidad Nacional de La Plata.
- John Scott, 2006. "Seguro Popular: Incidence Analysis," Working papers DTE 367, CIDE, División de Economía.
- Pagés, Carmen & Stampini, Marco, 2009.
"No education, no good jobs? Evidence on the relationship between education and labor market segmentation,"
Journal of Comparative Economics,
Elsevier, vol. 37(3), pages 387-401, September.
- Carmen Pagés-Serra & Marco Stampini, 2007. "No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation," Research Department Publications 4561, Inter-American Development Bank, Research Department.
- Carmen Pagés & Marco Stampini, 2007. "No Education, No Good Jobs?: Evidence on the Relationship Between Education and Labor Market Segmentation," IDB Publications (Working Papers) 4121, Inter-American Development Bank.
- Pagés, Carmen & Stampini, Marco, 2007. "No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation," IZA Discussion Papers 3187, Institute for the Study of Labor (IZA).
- Laura Juarez, 2008. "Are Informal Workers Compensated for the Lack of Fringe Benefits? Free Health Care as an Instrument for Formality," Working Papers 0804, Centro de Investigacion Economica, ITAM.
- Azuara, Oliver & Marinescu, Ioana, 2011. "Informality and the expansion of social protection programs," MPRA Paper 35073, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:idb:brikps:81001. 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: (Monica Bazan)
If references are entirely missing, you can add them using this form.