A Cohort Analysis of Labor Participation in Mexico, 1987-2009

Abstract

This paper conducts a cohort analysis of labor participation in urban Mexico in recent decades. The rates analyzed are the labor force participation, the unemployment rate, and the employment shares of the formal and informal salaried sectors, as well as of selfemployment. These rates are decomposed into age, cohort, and time effects. The life cycle patterns of labor force participation and formal employment follow a standard inverted Ushape. Younger workers are more likely to participate in the informal salaried sector, while self-employment increases monotonically with age. However, significant informal salaried employment is also observed among older unskilled workers and women of different ages. Strong countercyclical variations are observed for the informal salaried sector, while the opposite occurs for the formal sector. Self-employment fluctuations are for the most part acyclical. These facts support a mixed view of the labor markets whereby some informal sector workers are rationed out of the formal sector, while others go into this sector voluntarily. The analysis also indicates that the female labor force is countercyclical, suggesting the existence of an "added worker" effect. Long-run generational effects show a steadily rising participation in the informal sector with a corresponding decline in formality among newer generations of salaried workers. Some preliminary explanations for this fact are discussed.

Female labor force participation in Egypt and Palestine: An age–period–cohort analysis*

“…There are several studies in developing countries also. Duval‐Hernández and Romano (2009) conduct an APC analysis of labor participation in Mexico. They decompose FLFP rate into age, period, and cohort effects.…”

“…Most of the empirical literature on the dynamics of FLFP focused on the case of developed countries and Latin American countries (Baudelot & Gollac, 1995; Bourdallé & Cases, 1996; Crespo, 2007; Deborah, 2001; Yang, 2010). Such studies on developing countries are scanty (Duval‐Hernández & Romano, 2009; Paweenawat & McNown, 2018). A major gap in the empirical literature on FLFP in MENA has been in research on the dynamics of FLFP.…”