The Burden of Labour Costs in Mexico

Rojas, Gabriel Montes; Santamaría, Mauricio

doi:10.1111/j.1467-9914.2006.00367.x

Cited by 8 publications

(4 citation statements)

References 26 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…They examine the effects of differential enforcement across municipalities of Brazilian national labor regulations and find that stricter enforcement of labor regulation constrains firm size and leads to higher unemployment. Montes Rojas and Santamaría (2007) present survey evidence suggesting that having to go through the labor courts in a firing dispute increases firms' labor adjustment costs.…”

Section: Related Literaturementioning

confidence: 98%

The Plaintiff's Role in Enforcing a Court Ruling: Evidence from a Labor Court in Mexico

Kaplan,

Sadka

2011

View full text Add to dashboard Cite

We analyze the outcomes of 332 cases from a labor court in Mexico in which a judge awarded money to a plaintiff who claimed to have been fired by a firm without cause. The judgments were enforced in only 40% of the cases. A plaintiff may try to enforce a judgment by petitioning the court to seize the firm's assets when the firm refuses to pay. Thirty eight percent of the enforced judgments required at least one seizure attempt. We estimate the parameters of post judgment games in which the worker does not know if a seizure attempt would ultimately succeed and show that these models explain the data well. We then simulate the effects of a policy that reduces worker costs of a seizure attempt. We find that this policy would increase the probability of enforcement, either by increasing the probability that the worker attempts an asset seizure or by inducing firms to pay voluntarily to avoid such seizure attempts. However, reducing worker costs of seizure attempts can only have a modest effect on enforcement probabilities because a high percentage of firms are able to avoid payment in spite of worker efforts to force collection.

show abstract

Section: Related Literaturementioning

confidence: 98%

The Plaintiff's Role in Enforcing a Court Ruling: Evidence from a Labor Court in Mexico

Kaplan,

Sadka

2011

View full text Add to dashboard Cite

show abstract

“…of informal wages, which corresponds to the startup cost in the construction and personal services sectors in Mexico, as documented by McKenzie and Woodruff (2006). The firing cost is set to three monthly formal wages, following the evidence on severance payments in Montes- Rojas and Santamaría (2007). This firing cost finances formal UB.…”

Section: Functional Forms and Stochastic Processesmentioning

confidence: 99%

Unemployement Protection for Informal Workers in Latin America and the Caribbean

Finkelstein-Shapiro,

Sarzosa

2012

View full text Add to dashboard Cite

We use a dynamic stochastic general equilibrium search and matching model with salaried employment and informal self-employment to analyze the implications of introducing universal unemployment protection for informal workers through transfers, which are conditional on participation in training programs. We study how changes in unemployment benefits (UB) for unemployed workers in training programs (training UB), modify labor market outcomes for the unemployed. The model suggests that increasing training UB reduces unprotected unemployment and improves labor market outcomes through higher formal salaried employment and lower informal self-employment. Allowing for idiosyncratic quality in these training programs is key for these results. Higher training UB can also reduce total informal employment through a drastic reduction in the share of informal self-employment, without necessarily causing a large increase in total unemployment. Finally, the model suggests that increasing training UB may increase the volatility of unprotected unemployment. The influence of training programs on formal wage-setting is crucial to explain these results.

show abstract

“…Numerous papers and reports present similar information for a single country or a group of countries and analyze possible effects of these costs on labor markets outcomes (see Gruber, (1997); Kugler (1999); Saavedra and Maruyama (2000); Krugler and Krugler, (2003); Saavedra and Torero (2004); Rojas and Santamaría (2007); Crucesm Galiani and Kidyba, (2010);Betcherman, Daysal and Pagés, (2010); Mondragón et al (2010);Roman (2011);Sánchez and Álvarez, (2011);Almeida y Carneiro (2012); Bergolo and Cruces, (2012), Heckman and Pages, 2000). However, sometimes is difficult to compare across studies as methodologies diverge and in some cases not all costs are included.…”

Section: Job Security Provisionsmentioning

confidence: 99%

Measuring the Cost of Salaried Labor in Latin America and the Caribbean

Alaimo¹,

Bosch²,

Gualavisi³

et al. 2017

View full text Add to dashboard Cite

work is licensed under a Creative Commons IGO 3.0 AttributionNonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license.Note that link provided above includes additional terms and conditions of the license. 2 AbstractThis paper presents new data documenting the cost of salaried labor in 20 Latin American and Caribbean countries. We gather data on the three main costs associated to hiring salaried labor; (i) minimum wages and other monetary benefits, (ii) mandated contributions for social insurance and other benefits and (iii) job security provisions. We present two new indicators. First, we calculate the average non-wage cost of salaried labor (NWC). This indicator answers the following question: for the average wage, what additional share of wages must be satisfied by workers and employers to fulfill all the law mandated non-wage costs of a legal salaried relationship. Our second indicator combines these non-wage costs with the nominal restriction that legal wages cannot be lower than the minimum wage. We calculate the annual dollar value of paying a worker the minimum wage plus all mandated non-wage costs as a share of GDP per worker. This constitutes the minimum cost of salaried labor (MCSL). We highlight seven important facts; (i) The average non-wage cost of salaried labor (NWC) for the region is 49% of wages.(ii) There is a large dispersion across countries like Argentina, Brazil and Peru with costs around 70% of wages and countries like Trinidad and Tobago, Jamaica and Chile with cost less than 40% of wages. (iii) Mandatory contributions are the most important component of the average non-wage cost of salaried labor with 27.3% of wages followed by additional benefits with 13.8% of wages while job security provisions account for another 8.4%. (iv) On average, mandated contributions from employers amount to 17.5% of average annual wages, versus 9.8% of mandated contributions from employees. (v) The minimum cost of salaried labor (MCSL) is on average 39% of GDP per worker.(vi) Variation of the MCSL across countries is even larger. For countries like Mexico, Trinidad and Tobago or the Dominican Republic the MCSL it is below 15% of GDP per worker while the minimum cost of hiring a salaried worker in Honduras is 95% of GDP per capita. (vii) Despite having below average NWC, the five poorest countries in our sample are those presenting the highest MCSL, due to high minimum wages relative to GDP per worker.

show abstract

The Burden of Labour Costs in Mexico

Cited by 8 publications

References 26 publications

The Plaintiff's Role in Enforcing a Court Ruling: Evidence from a Labor Court in Mexico

The Plaintiff's Role in Enforcing a Court Ruling: Evidence from a Labor Court in Mexico

Unemployement Protection for Informal Workers in Latin America and the Caribbean

Measuring the Cost of Salaried Labor in Latin America and the Caribbean

Contact Info

Product

Resources

About