Micro-econometric studies of how government programs affect labor supply and saving in Mexico

Abstract

This thesis analyzes the micro-economic effects of different government programs on the savings and labor supply behavior of Mexican households and individuals. The first two chapters deal with household saving behavior and government intervention. Chapter 1 assesses the impact of increasing financial access on low-income people saving rates and on different informal savings instruments. It considers an exogenous expansion of a Mexican savings institute that targets low-income people and uses the 1992 and 1994 National Surveys of Income and Expenditures. Results show that the expansion increased the average saving rate of affected households by more than 3 to almost 5 percentage points of income. Evidence of crowding out of informal savings instruments caused by the expansion is limited. Chapter 2 investigates the effects of the country's financial reform in the early 1990's on households' saving rates. It uses the 1989 and 1992 Mexican National Surveys of Income and Expenditures. Households had different degrees of exposure to the financial reform depending on their income level and location. Results indicate that households located in cities, which are more likely to have financial intermediaries, reduced their saving rate significantly after the financial reform. The effects were significantly stronger among richer households. Findings are consistent with the hypothesis that the financial reform reduced borrowing constraints among younger households. Finally, chapter 3 evaluates the effects of a Mexican training program of the unemployment spells of trainees. This program consists of training courses on several types of activities. Non-parametric estimations and different hazard rate models are estimated. To tackle selection biases, a propensity score procedure was calculated. Parametric results for the complete database show that training increaser. the hazard rate of leaving unemployment by 20 percent to 60 percent, depending on the type of training. Average effects hide substantial variation among men and women. The training effect is in general non-significant for men, while it is highly significant for women.