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Monitoring Labor Market reaction to the International Crises in MEXICO

Monitoring Labor Market reaction to the International Crises in MEXICO. Samuel Freije-Rodríguez Poverty and Gender Unit PREM-LAC. Motivation Monitoring Tools Technical Challenges and Institutional requirements Lessons learned. MOTIVATION.

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Monitoring Labor Market reaction to the International Crises in MEXICO

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  1. Monitoring Labor Market reaction to the International Crises in MEXICO Samuel Freije-Rodríguez Poverty and Gender Unit PREM-LAC

  2. Motivation • Monitoring Tools • Technical Challenges and Institutional requirements • Lessons learned

  3. MOTIVATION • The Motivation to monitor labor market performance in Mexico comes from several corners: • Call of services from the Ministry of Labor • Analytical interest within the Bank and other Multilateral agencies • The questions of interest are several: • What is the size of the impact? (number of unemployed, destroyed jobs, earnings falls) • Who are going to be affected? (formal/informal workers, manufacturing/services workers, north/south regions) • What is the distributive impact? Who are going to lose jobs and earnings? The poor or the middle class? • What type of crisis is this? Structural or Cyclical? V-shaped or L-shaped?

  4. MONITORING • INPUTS • Monthly Data (Banco de InformaciónEconómica) • Quarterly Data (ENOE) • Previous Studies (Kaplan, López-Acevedo, Maloney, etc.) • OUTPUTS • Presentations/seminars to Public Officials • Briefs/leaflets • Forecast exercises • Distributive Impact Analysis

  5. Mexican Statics Institute (INEGI) produces monthly/quarterly data on a large array of subjects • It produces actual and seasonally-adjusted data for several labor-related variables • It makes quarterly labor force surveys available through its web-site • This wealth of information makes it possible a close monitoring of labor market performance

  6. Recent monthly unemployment rates in 2009 are the highest in the decade

  7. Participation rates have been declining since mid-2008

  8. Real average earnings show different trends by economic activity

  9. Recent quarterly data shows a sharp deceleration in salaried employment and a large destruction of non-salaried jobs since mid-2008

  10. Net Job destruction has concentrated in self-employed, small and microfirms and in manufacturing salaried jobs.

  11. Net job losses occur largely among low-skill females

  12. Prime age workers do not register net job losses

  13. There are job losses in all regions but Yucatan…

  14. …however, income falls the most in Northern Regions

  15. Mexico’s long series of quarterly economic data provides past evidence of likely impact of the crisis

  16. Earlier studies show the patterns of adjustment in previous crises From informal salaried to unemployed From self employed to unemployed From formal salaried to unemployed

  17. Previous studies provide employment-growth elasticities which allowed us for some preliminary forecast of the crisis

  18. TECHNICAL & INSTITUTIONAL CHALLENGES • Data Availability: • Selection of key informative variables that convey the most information • Timing: • High frequency data require regular monitoring • Processing: • Awareness of long term evolution as well as seasonal patterns • Sunk cost of collecting and processing first batch of data

  19. TECHNICAL & INSTITUTIONAL CHALLENGES (cont.) • Conceptual: • Debate about chosen variables and methodologies • Which policies to recommend? Youth employment or extended youth training and schooling? New social security mechanisms or temporary employemt? • Political: • Client’s concerns regarding impact (actual or forecast) of the crisis • Recovering from the crisis implies awaking the animal spirits, do forecasts affect them?

  20. LESSONS LEARNED • From the point of view of the analysis of the country • Mexico’s labor market has recorded a fast and sizeable impact from the international crises • The impact of the crisis concentrates on usual suspects: young, low-skilled, women • However, some new patterns emerge: • Net job losses concentrate in non-salaried workers • Northern Mexico appears to be more affected

  21. From the point of view of on-going monitoring: • Assemble more data (administrative records, Social Security statistics, panel data, etc.) • Follow up policies • Use more sophisticated forecasting instruments (labor markets and income distribution models) • Funding ?

  22. From the point of view of the World Bank units: • Efforts in collecting data and diagnosing one country help in doing the same for other countries • Joint effort of Social Protection (HD) and Poverty (PREM) units led to the production of a Note on Labor Markets and the Crisis for selected countries in the Region (Brazil, Colombia, Chile, El Salvador, Dominican Republic and Mexico) • Type and size of the impact varies across countries

  23. For instance: Colombia Chile

  24. Thanks !

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