Intergenerational transmission of informal employment in Mexico. A limited choice or better income prospects?

• In Event: Gender, Inequality, and Labor Markets in Economics

Abstract

This study motivates the use of retrospective data 2011 ESRU Survey of Social Mobility in Mexico. We formulate a formal/informal employment occupation model to estimate the likelihood for sons to continue the same father’s employment occupation sector. Different from the previous evidence in Mexico, our study differs in three ways: (1) empirical strategy aims at controlling as much as possible for heterogeneity sample, (2) microeconometric framework derives from a structural model with expected wages explicitly determining labor occupation decisions, (3) selectivity bias is achieved using a two-steep estimation following (Lee, 1982) procedure. We found the following results, first, there is feature of the model is that employment status and earnings are simultaneously determined, hence, the probability to be informal employers depends negatively on the earnings difference term, this evidence of negative selection bias could be explained due to few job opportunities in the formal sector, and second, evidence also show a strong connection between intergenerational occupations, hence, individuals with informal parent’s occupation have less likelihood to be enrolled in the formal economy and less options for upward social mobility.

Authors

• ADELAIDO GARCIA-ANDRES, UNIVERSIDAD AUTONOMA DE NUEVO LEON

• ERNESTO AGUAYO, UNIVERSIDAD AUTONOMA DE NUEVO LEON