The Employment Effects of Reforming Job Insurance Enforcement

We pilot a project designed to unpack the effects of a major labor reform in Mexico on employment in firms. Previous work shows a large gap between the de jure and de facto costs to firms (and benefits to workers) of the employment separation part of Mexico's labor law. Our earlier work focused on the outcomes for workers in ongoing labor law disputes. In this pilot, we aim to design interventions aimed at understanding the effect of the de jure – de facto gap on employment decisions by firms, and effort and attitudes of workers currently employed at firms. Academically, the work extends Bertrand and Crepon (2020). The policy relevance of the project is increased by the enactment of a major labor reform by Mexico in 2019. The pilot allows us to develop a project that can be scaled up as the new Mexican labor law is rolled out between 2021 and 2023. We build on an existing relationship with the Mexico City Labor Court developed through five years of collaboration between the research team and the court.