Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185166 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11706
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Do households value access to free health insurance when making labor supply decisions? We answer this question using the introduction of universal health insurance in Mexico, the Seguro Popular (SP), in 2002. The SP targeted individuals not covered by Social Security and broke the link between access to health care and job contract. We start by using the rollout of SP across municipalities in a differences-indifferences approach, and find an increase in informality of 4% among low-educated families with children. We then develop and estimate a household search model that incorporates the pre-reform valuation of formal sector amenities relative to the alternatives (informal sector and non-employment) and the value of SP. The estimated value of the health insurance coverage provided by SP is below the government's cost of the program, and the corresponding utility gain is, at most, 0.56 per each peso spent.
Subjects: 
search
household behavior
health insurance
informality
unemployment
JEL: 
J64
D10
I13
J46
Document Type: 
Working Paper

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