The price of fringe benefits when formal and informal labor markets coexist

David Argente, Jorge Luis García

Research output: Contribution to journalArticlepeer-review


We use the Mexican labor market structure to price the set of fringe benefits that household heads receive when formally employed. We exploit longitudinal, nationally-representative information on household heads who are formal, informal, or switch status at least once in our data. Using monthly labor income and an efficient markets hypothesis, we identify a standard linear model which accounts for time-variant household heads’ characteristics and household level and time fixed effects. Under the usual strict-exogeneity assumption, we find that the price of fringe benefits is approximately 7.9% of the average monthly labor income of informal workers, or $217 USD.

Original languageEnglish (US)
Article number1
JournalIZA Journal of Labor Economics
Issue number1
StatePublished - Dec 1 2015

All Science Journal Classification (ASJC) codes

  • Industrial relations
  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management


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