Mobility in the Urban Labor Market

A Panel Data Analysis for Mexico

X. Gong, A.H.O. van Soest, E. Villagomez

Research output: Working paperDiscussion paperOther research output

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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.
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages31
Volume2000-46
Publication statusPublished - 2000

Publication series

NameCentER Discussion Paper
Volume2000-46

Fingerprint

Urban labor markets
Panel data analysis
Informal sector
Mexico
Labour market
Market states
Random effects
Entry and exit
Household survey
Multinomial logit
Recession
Education
Income
Economic growth

Keywords

  • informal sector work
  • mobility
  • panel data
  • Mexico

Cite this

Gong, X., van Soest, A. H. O., & Villagomez, E. (2000). Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico. (CentER Discussion Paper; Vol. 2000-46). Tilburg: Econometrics.
Gong, X. ; van Soest, A.H.O. ; Villagomez, E. / Mobility in the Urban Labor Market : A Panel Data Analysis for Mexico. Tilburg : Econometrics, 2000. (CentER Discussion Paper).
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Gong, X, van Soest, AHO & Villagomez, E 2000 'Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico' CentER Discussion Paper, vol. 2000-46, Econometrics, Tilburg.

Mobility in the Urban Labor Market : A Panel Data Analysis for Mexico. / Gong, X.; van Soest, A.H.O.; Villagomez, E.

Tilburg : Econometrics, 2000. (CentER Discussion Paper; Vol. 2000-46).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Mobility in the Urban Labor Market

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AU - van Soest, A.H.O.

AU - Villagomez, E.

N1 - Pagination: 31

PY - 2000

Y1 - 2000

N2 - 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.

AB - 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.

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M3 - Discussion paper

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Gong X, van Soest AHO, Villagomez E. Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico. Tilburg: Econometrics. 2000. (CentER Discussion Paper).