Subcontracting Retreat: Early Estimates Using Administrative Data

Abstract

Labor flexibility policies have increased temporary and subcontracted jobs. These types of employment are associated with lower quality jobs. In this paper, five-year economic census data and social security administrative data were collected to estimate, in non-census years, out-of-sample the percentage of subcontracted jobs. This evidence is relevant for assessing the impact of a legislation that banned subcontracting. Predictor variables such as time fixed effects, industry, and the rate of temporary workers were used. The results show a significant decrease in subcontracting, particularly in the secondary sector. These findings raise the need for future research on improvements in post-reform well-being in the labor market.

Keywords

• Temporary Work Agencies
• Domestic Outsourcing
• Out-of-Sample
• Weighted Least Squares
• INEGI-Mexico
• Job Quality