Did Mexico’s Seguro Popular Universal Health Coverage Programme Really Reduce Formal Jobs?
Mexico’s Seguro Popular (SP) has been at the forefront of the debate on social protection benefits both because of its large size, covering half of Mexico’s population and close to 50 million people, and because it often has been portrayed as the leading example of an informality-inducing social policy.
This Working Paper uses the roll-out of Mexico’s SP across municipalities to quantitatively assess its impact on private sector formal employment in Mexico, using more detailed data and improved econometric methods compared to previous papers.
The authors find no robust evidence of a decrease in formal employment, suggesting the attraction of SP was not large enough to overcome the benefits of having a formal job. They also find no effects in average salaries of jobs affiliated to the Mexican Institute of Social Security (IMSS), further suggesting that there were no strong shifts in labour supply from the formal to the informal sector.
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