Essays on Economic and Social Policies in Mexico

Abstract

This dissertation consists of three independent essays on development economics concerning economic and social policies in Mexico, which respectively address reduction of fixed costs of formality and business formalization, relationship between re-migration of deported migrants and health insurance access, and maternal labor supply outcomes upon receiving child care subsidies. In particular, in the first essay I find that sizeable tax and financial benefits to formalize have modest effects on business formalization. The evidence suggests that the marginal benefit of formalizing does not exceed the net benefit of informality for most informal businesses. Thus, reductions in the fixed costs of operating formally, financial access for business growth and social protection benefits, are not very effective tools to increase formalization in Mexico. The second essay investigates why intention to re-migrate to the U.S. for deported Mexican immigrants has dropped considerably since 2008. I find that deported migrants eligible to enroll in Seguro Popular, a subsidized health care program that covers close to half of the Mexican population of the lowest income levels, are less likely to re-migrate. This finding has relevant implications in the sense that social policies from migrants’ home countries may have effects on international migration and re-migration flows. The evidence presented in the third essay suggests that a subsidy that covers almost the full cost of child care has positive effects on mothers’ employment, work hours and labor income, especially on mothers with a low educational background.