Abstract: This paper examines how tax policy affects corporate investment in Mexico. Using anonymized corporate tax return data, I study two reforms: the removal of an investment expensing provision and an increase in the value-added tax (VAT).

Due to data confidentiality requirements, the paper is available to search committees and upon request. A public version will be posted soon.

Abstract: The uneven spatial distribution of schools hinders high-achieving students, particularly the socioeconomically disadvantaged, from accessing elite educational resources because of long commutes and associated costs. We study this problem within the context of COMIPEMS, a centralized system of public high school admissions in Mexico City’s metropolitan area. We estimate student preferences by assuming that the observed matching is stable in the equilibrium. Our preference estimates show that students face a quality-proximity trade-off, which is heterogeneous by program track (academic versus non-academic). Counterfactual distance-based subsidies would significantly increase high-achieving students’ admission to elite programs, especially in the academic track. In contrast, prioritization policies alone have negligible effects on assignment outcomes without addressing the demand side or locations of supply. Our findings call for increasing the supply of elite programs in remote places within this centralized assignment system.

Abstract: This paper studies how centralized assignment rules shape student placement and school quality. We examine Mexico’s 2025 reform, which replaced exam-based assignment for non-elite schools with a two-list mechanism. Using administrative applicant data and standardized test records, we estimate school value-added as a measure of quality and build a structural model of school demand and supply. On the demand side, we model students’ school choices and estimate preference parameters under the Stability assumption. On the supply side, schools determine their quality level by trading off enrollment incentives and direct returns to quality against their associated costs. Estimates show students prefer high quality schools. Non-elite schools improve quality only in response to enrollment incentives. In contrast, elite schools respond to both enrollment incentives and direct benefits from providing higher quality. Counterfactuals show that the new system shifts high achievers to non-elite schools; however, it also increases the number of unassigned students. The new system changes school quality, with value-added falling at elite schools and rising at non-elite schools. Yet elite schools continue outperforming non-elite schools. Expanding non-elite capacity reduces unassigned students without altering these effects. This paper highlights both the equity gains and the capacity challenges of the reform.

Abstract:  This article documents several measures of intergenerational economic mobility in Mexico. We employ census data available for 1990 to 2015 on earnings. Since censuses do not link individuals over time, the empirical strategy follows a synthetic approach by matching individuals with synthetic family earnings by the state where they were born and their birth cohort. The aggregate estimate indicates an intergenerational elasticity (IGE) of 0.50, adjusted for cross-country comparison; intergenerational mobility is low in comparison with advanced economies. Results also suggest a higher intergenerational mobility for younger cohorts. Moreover, people born in southern Mexico have a lesser degree of intergenerational mobility.

Abstract:  The benefits of place-based policies are still under debate. In this study, we analyze what is probably one of the boldest interventions in the recent history of Mexico and the rest of the world: the Northern Border Free Zone (NBFZ). Launched in January 2019, this program doubles the minimum wage and substantially lowers taxes in 43 municipalities along the border with the United States, aiming to improve living standards for low-wage workers and foster economic activity within the region. Given the unique features of the NBFZ, we estimate its short-run effects on labor outcomes: employment, wages, and formality. Our primary identification strategy follows a synthetic control method employing monthly administrative data at the municipality level for the period 2015–2019. Using administrative data for formal employment, we find that the policy substantially increased labor income in the NBFZ by approximately 9% over the control municipalities. The results for employment are less clear. Formal employment showed 1.6% less growth in the NBFZ than in the control municipalities, but the estimate is imprecise and we cannot reject a null impact of the program on employment. These results are robust to alternative control groups, including metropolitan areas in the United States. We also use the labor force survey to estimate the effects on formality at the individual level and find results closer to a null effect. These two results suggest that the NBFZ did not substantially affect employment, and the intersection of confidence intervals for the two estimates implies a maximum loss of employment of approximately 24,000 jobs.

Abstract:  In this article we use unpublished and geo-referenced data at the municipality level on the beneficiaries of the main programs of the Ministry of Social Development who received the Social Book in 2016. The objective is to know national aspects of social policy and its relationship with poverty. In general, it is observed that social policy covers 65-69 percent of the people in poverty, granting a transfer of 822 pesos per beneficiary family, who has access to 1.15 programs on average. Through a simple linear regression it is possible to observe that families living in the places with greater poverty receive a monetary transfer similar to families that live in places with less poverty. In contrast, the places with greater poverty have a greater coverage of beneficiaries in relation to the number of poor people than places with less poverty; which is driven by Prospera.

RESUMEN: En este artículo se utilizan datos inéditos y georreferenciados a nivel municipal sobre los beneficiarios de los principales programas de la Secretaria de Desarrollo Social que recibieron la Cartilla Social en 2016. El objetivo es conocer aspectos nacionales de la política social y su relación con la pobreza. De manera general, se observa que la política social cubre entre 65 y 69 por ciento de las personas en pobreza, otorgando una transferencia de 822 pesos por familia beneficiaria, que tiene acceso a 1.15 programas en promedio. A través de una regresión lineal simple es posible observar que las familias que viven en los lugares con mayor pobreza reciben una transferencia monetaria similar a familias que viven en lugares con menor pobreza. En contraste, los lugares con mayor pobreza tienen una mayor cobertura de beneficiarios en relación con el número de pobres en lugares con menor pobreza, debido principalmente a Prospera.

Abstract: We estimate residential water demand for Mexico´s Northern Border state of Nuevo León using data from the National Household Survey. Employing Shin's (1985) price perception model and instrumental variables (IV) techniques to deal with simultaneity problems, our findings indicate that households in the region respond to a ‘perceived' price which is considerably lower than actual water prices. Elasticity estimates for price and income are consistent with theory and previous findings in the literature.