The Informal Sector in Mexico: Characteristics and Dynamics

This work analyzes the dynamics of the informal labor market in Mexico using information from the National Survey of Urban Employment (ENEU) and the urban section of the Quarterly National Employment Survey (ENET). In the first part, it compares three periods: 1990-1991, 1995-1996 and 2003-2004 to study the changes in eight of the labor market categories using transition matrices. The categories include dependent informal, dependent formal, employer, self-employed, public sector, not remunerated, unemployed and, inactive. In the second part, it uses a multinomial logit model with the mentioned categories as the dependent variable and it finds that age increases the probability of be-ing in the informal sector and that education increases the probability of being employed in the formal or public sectors. The third part uses quantile regressions to explore the determination of salaries as function of the labor market categories. It is found that the categories employer and public sector have the highest returns. Key word