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Social Protection Programs and Employment: The Case of Mexico's Seguro Popular Program

  • Raymundo M. Campos-Vazquez
  • Melissa A. Knox

Mexico created Seguro Popular in 2002 with the goal of providing free or subsidized health insurance coverage to 47 million uninsured people by the year 2013. Hence, one unintended consequence of the program could be an increase in the size of the informal sector. The introduction of the Seguro Popular program was conducted in stages, across municipalities and time. We exploit this variation and implement a differences-in-differences approach in order to identify the causal effect of the program in formal employment outcomes. We analyze the effect of Seguro Popular using 33 large and relatively rich cities from labor force surveys conducted from 2001 to 2004. In order to measure the effect for poorer municipalities, we also use the individual-level Oportunidades dataset that covers 136 municipalities from 2002 to 2004. We find little evidence of any correlation between Seguro Popular and the decision of workers to be employed in the formal or informal sector. One possible explanation of our findings is the low enrollment of the Seguro Popular program during the period we study. We provide suggestive evidence from the 33 cities that the result holds for the 2005 to 2006 period as well. We conclude that the recent increase in informal employment in large municipalities in Mexico is due to other causes.

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Paper provided by University of Washington, Department of Economics in its series Working Papers with number UWEC-2011-10.

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Handle: RePEc:udb:wpaper:uwec-2011-10
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  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. Cally Ardington & Anne Case & Victoria Hosegood, 2007. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," NBER Working Papers 13442, National Bureau of Economic Research, Inc.
  3. Wagstaff, Adam, 2007. "Social health insurance reexamined," Policy Research Working Paper Series 4111, The World Bank.
  4. Sebastian Galiani & Federico Weinschelbaum, 2007. "Modeling Informality Formally: Households and Firms," CEDLAS, Working Papers 0047, CEDLAS, Universidad Nacional de La Plata.
  5. repec:idb:brikps:59558 is not listed on IDEAS
  6. David H. Autor & John J. Donohue III & Stewart J. Schwab, 2003. "The Costs of Wrongful-Discharge Laws," NBER Working Papers 9425, National Bureau of Economic Research, Inc.
  7. Hilary Hoynes, 1993. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP," NBER Working Papers 4407, National Bureau of Economic Research, Inc.
  8. Cristian C. Baeza & Truman G. Packard, 2006. "Beyond Survival : Protecting Households from Health Shocks in Latin America," World Bank Publications, The World Bank, number 7120.
  9. Guillermo E. Perry & William F. Maloney & Omar S. Arias & Pablo Fajnzylber & Andrew D. Mason & Jaime Saavedra-Chanduvi, 2007. "Informality : Exit and Exclusion," World Bank Publications, The World Bank, number 6730.
  10. Rodrigo Barros, 2008. "Wealthier But Not Much Healthier: Effects of a Health Insurance Program for the Poor in Mexico," Discussion Papers 09-002, Stanford Institute for Economic Policy Research.
  11. Moffitt, Robert A., 2002. "Welfare programs and labor supply," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 34, pages 2393-2430 Elsevier.
  12. 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.
  13. Paul A. Hagstrom, 1996. "The Food Stamp Participation and Labor Supply of Married Couples: An Empirical Analysis of Joint Decisions," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 383-403.
  14. Truman G. Packard & Cristian C. Baeza, 2006. "Beyond Survival: Protecting Households from Health Shocks in Latin America," IDB Publications (Books), Inter-American Development Bank, number 59558, November.
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