Determinants of coverage and the value of social insurance with a large informal sector: The Mexican case
Mexican legislation mandates social insurance coverage through the workplace, but fewer than a third of private sector workers is covered, and coverage is concentrated on high income households. In this dissertation I seek to broaden our understanding of social security coverage and its implications in Mexico. Given this low coverage rate, the relevant policy questions are: Can employees really choose between covered and uncovered jobs? If this is the case, why extend coverage if people do not choose to be covered? The alternative is that social insurance coverage might be limited because there is rationing of "good jobs" that include coverage, so then there may be a strong motive for government to design mechanisms to provide coverage. In order to answer these questions, I focus on four main issues. First, I evaluate why only some Mexican firms offer social insurance to their workers, what are the incentives for workers to take up social insurance, and how these incentives vary across workers. Second, I examine the determinants of Mexican social insurance coverage in the private sector by estimating the probability of being covered, using as explanatory variables worker and household characteristics as well as job and firm characteristics. Third, I analyze wage differentials for covered and uncovered workers controlling for individual productivity, job and firm characteristics, and household characteristics that affect the value that workers place on social insurance coverage. The fourth issue examined is whether the Mexican Social Security agency, or the "Instituto Mexicano del Seguro Social " (henceforth IMSS) has a high risk pool. The results of the analysis suggest that there is a queue for "good jobs", where the lowest educated have least access to jobs that offer social insurance coverage in Mexico. The exception, where workers seem to have choice, is for highly educated urban men. When segregating employees into groups, I find that covered workers who report using IMSS health services when ill, seem to value social insurance coverage more than those, who although covered by IMSS, use other health services. The dissertation concludes with a discussion of the policy implications of the main findings.
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|Authors:||Arzoz Padres, Jacqueline|
|Type of publication:||Other|
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