In 2016, Mexico initiated a school-linked social insurance policy, providing more than 6 million public high school students with basic medical benefits through the national social insurance institution (IMSS). This policy is especially pertinent in a context where 60% of Mexico’s workforce is employed informally, and policymakers and international institutions commonly worry that social protections not linked to formal employment might incentivize informality. With significant state-level heterogeneity in informality rates ranging from 40% to 80%, this paper combines differences across cohorts in exposure to the policy with differences across states in initial informality conditions to scrutinize the policy’s impact on early labor market outcomes. The results indicate that in states with higher initial informality rates, exposed cohorts exhibit increased labor force participation and formality rates. Specifically, a 1 percentage point rise in initial state informality is associated with a 0.8 to 1.3 percentage point increase in formality among the impacted groups. The policy does not significantly influence school enrollment or monthly income, and its effects are not gender-specific. While the formalization effect recedes post COVID-19, I find no evidence that the policy skews young workers toward informality in the early stages of their labor trajectories.

Domestic workers provide essential services for the functioning of private households and their members. Yet, domestic workers rarely have access to rights and protection, presenting a very high rate of informality. In Mexico, there are around 2 million domestic workers, with significant occupational segregation by gender, as more than 90% are women. I study a change in the Mexican federal labor law in 2019, expanding the access to social insurance benefits for domestic workers. The new legislation was accompanied by a pilot program of voluntary enrollment, with the objective of transitioning towards a mandatory regime. I analyze the impact of these recent developments on the observed labor outcomes of domestic workers in the quarterly labor force survey.

The United States-Mexico-Canada Agreement (USMCA) substituted the North America Free Trade Agreement (NAFTA) in 2020, updating trade rules for one of the world’s largest free trade zones. Some key changes include stricter rules of origin and higher wage requirements in the automotive industry, as well as a requirement for broader worker representation in collective bargaining in Mexico. This project studies what is the impact of the new provisions on employment and wages in Mexico, using administrative employer-employee matched data.