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

38 Pages Posted: 19 Jan 2001

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: November 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 use 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 (November 2000). Available at SSRN: https://ssrn.com/abstract=252019

Xiaodong Gong (Contact Author)

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

Coombs Building 9
Canberra, Australian Capital Territory 0200
Australia
61 2 6125 4235 (Phone)
61 2 6125 0182 (Fax)

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

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
049 228/ 3894 527 (Phone)
049 228/ 3894 510 (Fax)

Arthur H. O. van Soest

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Elizabeth Villagomez

Tomillo Foundation

Serrano 136
Economic Research
28006 Madrid
Spain

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