This paper investigates the impact of Mexico's labor outsourcing partial ban on formal workers' labor market outcomes. Using longitudinal administrative data and an event-study framework, we analyze the evolution of employment and wages before and after the reform. The findings show that post-reform, regularized workers were more likely to retain their positions in the private formal job sector compared to a counterfactual scenario without the reform. Moreover, due to the reform, wages for workers directly affected increased by 3-4%, with significant variation across gender, age, industry, firm size, and region, indicating a heterogeneous response to the reform. These findings underscore the varied impacts of outsourcing restrictions on different segments of the labor market, providing valuable insights into the implications of labor market regulations on employment stability and wage growth.
Inequality and mobility in the mexican labor market [BA dissertation]
In this paper, I use a model proposed by Bowlus and Robin (2004) to estimate permanent income inequality in Mexico, that is, inequality for an income measure that considers individuals’ mobility over time. Thus, I study inequality from an intragenerational mobility perspective. Furthermore, I extend the model of Bowlus and Robin (2004) to include the distinction between formal and informal employment to know how the flows between them impact permanent income inequality. I find that the traditional Gini measurement, taking current income as a measure of income, is 0.43, while the Gini measured on expected permanent income is 0.22. In other words, when considering an income measure that considers the dynamics of the working life of Mexican workers, inequality is reduced by almost 50% compared to the conventional measurement. This result suggests that the labor dynamics of Mexican workers throughout their lives is an essential factor to take into account to have a deeper understanding of Mexico’s inequality and its possible causes.