IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v12y2024i11p301-d1514605.html
   My bibliography  Save this article

Informal Employment, the Tertiary Sector, and the Gross Domestic Product: A Structural Equations Model for the Mexican Economy

Author

Listed:
  • David Robles Ortiz

    (Escuela Superior de Economía, Instituto Politécnico Nacional, Mexico City 11350, Mexico)

  • Raymundo Alexei Ambriz Torres

    (Escuela Superior de Economía, Instituto Politécnico Nacional, Mexico City 11350, Mexico)

Abstract

In Mexico, approximately 55% of the working population is employed informally, contributing 24.4% to the Gross Domestic Product (GDP) in 2022. This study analyzed the impact of wages, taxes, government spending, and unemployment on the informal economy of Mexico from 1980 to 2022, as well as its relationship with the tertiary sector’s contribution to the GDP. The methodology of the study was structural equation modeling. The findings of this study revealed that an increase in taxes, the unemployment rate, and the minimum wage in Mexico tends to be accompanied by a rise in informal employment. Finally, a unitary change in the latent variable informality affected the growth of the tertiary sector’s contribution to the GDP by 0.37 units.

Suggested Citation

  • David Robles Ortiz & Raymundo Alexei Ambriz Torres, 2024. "Informal Employment, the Tertiary Sector, and the Gross Domestic Product: A Structural Equations Model for the Mexican Economy," Economies, MDPI, vol. 12(11), pages 1-21, November.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:11:p:301-:d:1514605
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/12/11/301/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/12/11/301/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pierre Bachas & Lucie Gadenne & Anders Jensen, 2024. "Informality, Consumption Taxes, and Redistribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(5), pages 2604-2634.
    2. Catalina Granda-Carvajal & Danny García-Callejas, 2023. "Informality, tax policy and the business cycle: exploring the links," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(1), pages 114-166, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hummel, Albert Jan & Ziesemer, Vinzenz, 2023. "Food subsidies in general equilibrium," Journal of Public Economics, Elsevier, vol. 222(C).
    2. Thomas,Alastair Geoffrey Arthur, 2023. "Measuring Tax Progressivity in Low-Income Countries," Policy Research Working Paper Series 10460, The World Bank.
    3. Matthew Fisher-Post & Amory Gethin, 2023. "Government Redistribution and Development Global Estimates of Tax and Transfer Progressivity 1980-2019," Working Papers halshs-04423529, HAL.
    4. Mr. Younes Zouhar & Jon Jellema & Nora Lustig & Mohamed Trabelsi, 2021. "Public Expenditure and Inclusive Growth - A Survey," IMF Working Papers 2021/083, International Monetary Fund.
    5. Abreha,Kaleb Girma & Cirera,Xavier & Davies,Elwyn Adriaan Robin & Fattal Jaef,Roberto N. & Maemir,Hibret Belete, 2022. "Deconstructing the Missing Middle : Informality and Growth of Firms in Sub-Saharan Africa," Policy Research Working Paper Series 10233, The World Bank.
    6. Missbach, Leonard & Steckel, Jan Christoph, 2024. "Distributional impacts of climate policy and effective compensation: Evidence from 88 countries," EconStor Preprints 296491, ZBW - Leibniz Information Centre for Economics.
    7. Léo Czajka & Bassirou Sarr & Mattea Stein, 2024. "Fraud Detection Under Limited State Capacity: Experimental Evidence From Senegal," CSEF Working Papers 731, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    8. Das, Satadru & Gadenne, Lucie & Nandi, Tushar & Warwick, Ross, 2023. "Does going cashless make you tax-rich? Evidence from India’s demonetization experiment," Journal of Public Economics, Elsevier, vol. 224(C).
    9. Aroop Chatterjee & Léo Czajka & Amory Gethin, 2021. "Can Redistribution Keep Up with Inequality? Evidence from South Africa, 1993-2019," PSE Working Papers halshs-03364039, HAL.
    10. Asatryan, Zareh & Gomtsyan, David, 2020. "The incidence of VAT evasion," ZEW Discussion Papers 20-027, ZEW - Leibniz Centre for European Economic Research.
    11. Kotlikoff, Laurence J. & Lagarda, Guillermo & Marin, Gabriel, 2023. "A Personalized VAT with Capital Transfers: A Reform to Protect Low-Income Households in Mexico," IDB Publications (Working Papers) 12985, Inter-American Development Bank.
    12. Doligalski, Paweł & Rojas, Luis E., 2023. "Optimal redistribution with a shadow economy," Theoretical Economics, Econometric Society, vol. 18(2), May.
    13. Ardanaz, Martín & Hübscher, Evelyne & Keefer, Philip & Sattler, Thomas, 2022. "Policy Misperceptions, Information, and the Demand for Redistributive Tax Reform: Experimental Evidence from Latin American Countries," IDB Publications (Working Papers) 12607, Inter-American Development Bank.
    14. World Bank, 2023. "Poverty and Distributional Impact of Fiscal Policy in Dominican Republic [Impacto en Pobreza y Distributivo de la Política Fiscal en República Dominicana]," World Bank Publications - Reports 40655, The World Bank Group.
    15. Gaetano Lisi, 2021. "Can the AD-AS Model Explain the Presence and Persistence of the Underground Economy? Evidence from Italy," Economies, MDPI, vol. 9(4), pages 1-11, November.
    16. Zarate Vasquez,Roman David, 2022. "Spatial Misallocation,Informality, and Transit Improvements : Evidence from Mexico City," Policy Research Working Paper Series 9990, The World Bank.
    17. Gadenne, Lucie & Nandi, Tushar K. & Rathelot, Roland, 2019. "Taxation and Supplier Networks : Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1208, University of Warwick, Department of Economics.
    18. Alain Babatoundé & Bart Capéau & Romain Houssa, 2023. "Welfare effects of indirect tax policies in West Africa," Working Papers of Department of Economics, Leuven 746845, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    19. Warwick, Ross & Harris, Tom & Phillips, David & Goldman, Maya & Jellema, Jon & Inchauste, Gabriela & Goraus-Tańska, Karolina, 2022. "The redistributive power of cash transfers vs VAT exemptions: A multi-country study," World Development, Elsevier, vol. 151(C).
    20. Das, S & Gadenne, L & Nandi, T & Warwick, R, 2022. "Does going cashless make you tax-rich? Evidence from India’s demonetization experiment," CAGE Online Working Paper Series 605, Competitive Advantage in the Global Economy (CAGE).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:12:y:2024:i:11:p:301-:d:1514605. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.