Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico

31 Pages Posted: 23 Oct 2000

See all articles by Xiaodong Gong

Xiaodong Gong

Australian National University (ANU) - School of Economics; IZA Institute of Labor Economics

Arthur van Soest

Tilburg University; Netspar; RAND Corporation; Institute for the Study of Labor (IZA)

Elizabeth Villagomez

Tomillo Foundation

Multiple version iconThere are 2 versions of this paper

Date Written: 2000

Abstract

We analyze mobility in urban Mexico between three labor market states: working in the formal sector, working in the informal sector, and not working. We see a dynamic multinomial logit panel data model with random effects, explaining the labor market state of each individual during each time period. The data is drawn from Mexico's Urban Employment Survey, a quarterly household survey for urban Mexico. Two separate five-wave panels are used: the first covering a period of rapid economic growth (1992?1993), the second a period of recession after the Peso crisis (1994?1995). Our main results are in line with the theory that formal sector jobs are superior to informal sector jobs and that working in the informal sector is a temporary state for those who cannot find a formal sector job and cannot afford not to work. Entry and exit rates for the formal sector are lower than for the informal sector. The probability of formal sector employment strongly increases with education level. For men, it is easier to enter the formal sector from the non-working state than from the informal sector. The probability of working in the informal sector decreases with the level of income of other family members, while the probability of not working increases with it.

Keywords: informal sector work, mobility, panel data, Mexico

JEL Classification: C23, C25, J60, R23

Suggested Citation

Gong, Xiaodong and van Soest, Arthur H. O. and van Soest, Arthur H. O. and Villagomez, Elizabeth, Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico (2000). Available at SSRN: https://ssrn.com/abstract=247007 or http://dx.doi.org/10.2139/ssrn.247007

Xiaodong Gong (Contact Author)

Australian National University (ANU) - School of Economics ( email )

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HOME PAGE: http://econrsss.anu.edu.au/Staff/gong/contact_xg.htm

IZA Institute of Labor Economics ( email )

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Arthur H. O. van Soest

Netspar

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Tilburg University ( email )

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RAND Corporation ( email )

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Institute for the Study of Labor (IZA)

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Germany

Elizabeth Villagomez

Tomillo Foundation

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Economic Research
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Spain