Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267477 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15740
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Formal sector entry-level jobs in Mexico offer low starting salaries but substantial wage growth. This paper experimentally tests whether a six-months wage incentive can increase formal employment among secondary school graduates. Combining survey and high-frequency social security data, the paper shows that the incentive increases formal employment among vocational school graduates by 4.2 percentage points (14.5 percent) over the first two years driven by a 5 percentage point (25 percent) increase in permanent formal jobs. These employment gains are due to both extensive and intensive margin effects. Treatment effects are concentrated among youths with binding reservation wages who also tend to underestimate formal wage growth.
Subjects: 
youth employment
wage subsidy
formal employment
reservation wages
JEL: 
J08
J24
J41
J46
J63
Document Type: 
Working Paper

Files in This Item:
File
Size
2.31 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.