Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time
In this paper, we suggest a holistic explanation for the role currently played by self-employment in less developed countries and, consequently, a reason for its persistence and growth in recent years. At the same time, we link this explanation with current discussions on the role of very small econ...
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MDPI AG
2022-05-01
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| Online Access: | https://www.mdpi.com/2227-7390/10/10/1693 |
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| author | Carlos Salas-Páez Luis Quintana-Romero Miguel A. Mendoza-González José Álvarez-García |
| author_facet | Carlos Salas-Páez Luis Quintana-Romero Miguel A. Mendoza-González José Álvarez-García |
| author_sort | Carlos Salas-Páez |
| collection | DOAJ |
| description | In this paper, we suggest a holistic explanation for the role currently played by self-employment in less developed countries and, consequently, a reason for its persistence and growth in recent years. At the same time, we link this explanation with current discussions on the role of very small economic units and informality and their relation to unemployment rates. In general, countries where the combined share of self-employment and very small units is high exhibit lower unemployment rates than countries of similar levels of development, but where the small units’ share is less significant. Using a rich set of labor data for Mexico, we examined flows between seven different labor statuses. Equilibrium vectors estimated through Markov matrices show that flows are linked to the economic cycle and that there exists a gender difference in behavior in these flows. We found that a dichotomic explanation of self-employment persistence (entrepreneurial reservoir/survival strategy) is not supported by evidence. We also found that strong links exist between the size of the self-employed sector and unemployment rates. With the help of a set of surveys on very small economic units, we identified a three-tier structure for very small economic units in Mexico. Thus, self-employment and small-sized economic units are both a source of income and a source of cheap goods for lower-income sectors. They serve as a buffer against unemployment and help to provide subsistence conditions for the poorest segment of the population. Finally, we discuss some questions that were raised along the text that help to guide future research. |
| first_indexed | 2024-03-10T03:29:29Z |
| format | Article |
| id | doaj.art-f8096b3a8aab4786bae03b9accfda2b3 |
| institution | Directory Open Access Journal |
| issn | 2227-7390 |
| language | English |
| last_indexed | 2024-03-10T03:29:29Z |
| publishDate | 2022-05-01 |
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| spelling | doaj.art-f8096b3a8aab4786bae03b9accfda2b32023-11-23T12:01:01ZengMDPI AGMathematics2227-73902022-05-011010169310.3390/math10101693Analysis of Job Transitions in Mexico with Markov Chains in Discrete TimeCarlos Salas-Páez0Luis Quintana-Romero1Miguel A. Mendoza-González2José Álvarez-García3Department of Economics, Universidad Autónoma Metropolitana Azcapotzalco, Ciudad de México 02120, MexicoDepartment of Economics, Facultad de Estudios Superiores Acatlán UNAM, Naucalpan de Juárez 53150, MexicoFaculty of Economics Postgraduate Division, UNAM, Ciudad de México 04510, MexicoDepartamento de Economía Financiera y Contabilidad, Instituto Universitario de Investigación para el Desarrollo Territorial Sostenible (INTERRA), Universidad de Extremadura, 10071 Cáceres, SpainIn this paper, we suggest a holistic explanation for the role currently played by self-employment in less developed countries and, consequently, a reason for its persistence and growth in recent years. At the same time, we link this explanation with current discussions on the role of very small economic units and informality and their relation to unemployment rates. In general, countries where the combined share of self-employment and very small units is high exhibit lower unemployment rates than countries of similar levels of development, but where the small units’ share is less significant. Using a rich set of labor data for Mexico, we examined flows between seven different labor statuses. Equilibrium vectors estimated through Markov matrices show that flows are linked to the economic cycle and that there exists a gender difference in behavior in these flows. We found that a dichotomic explanation of self-employment persistence (entrepreneurial reservoir/survival strategy) is not supported by evidence. We also found that strong links exist between the size of the self-employed sector and unemployment rates. With the help of a set of surveys on very small economic units, we identified a three-tier structure for very small economic units in Mexico. Thus, self-employment and small-sized economic units are both a source of income and a source of cheap goods for lower-income sectors. They serve as a buffer against unemployment and help to provide subsistence conditions for the poorest segment of the population. Finally, we discuss some questions that were raised along the text that help to guide future research.https://www.mdpi.com/2227-7390/10/10/1693self-employmentinformal sectorunemploymentlabor flowssurvival strategies |
| spellingShingle | Carlos Salas-Páez Luis Quintana-Romero Miguel A. Mendoza-González José Álvarez-García Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time Mathematics self-employment informal sector unemployment labor flows survival strategies |
| title | Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time |
| title_full | Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time |
| title_fullStr | Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time |
| title_full_unstemmed | Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time |
| title_short | Analysis of Job Transitions in Mexico with Markov Chains in Discrete Time |
| title_sort | analysis of job transitions in mexico with markov chains in discrete time |
| topic | self-employment informal sector unemployment labor flows survival strategies |
| url | https://www.mdpi.com/2227-7390/10/10/1693 |
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