Volume 44, Number 173,
April-June 2013
From Recession to Recovery:
Production and Employment in Mexico and The State of Mexico
Pablo Mejía, Sandra Ochoa and Miguel Ángel Díaz
Effects on Production and Employment: Evidence by Sector ( ...continuation )

However, the drive of us demand during the current expansion period has reversed the losses in secondary production levels in the State of Mexico caused by the international crisis. In fact, as seen in Figure 2, the return of State of Mexico industrial production has allowed it to reach 8.0% above its pre-recession levels, which has brought total state activity to 4.6% above its pre-recession value. The success of the state services sector and national sectors in general, however, has not been sufficient to reach levels prior to the recession.

It is also interesting to emphasize the immense similarity in magnitude and duration of the phases of the cycle for productive activities on the national level (see Table 2). Moreover, Figure 2 shows that by the fourth quarter of 2010, the majority of measures of national production were about 1% above pre-recession levels. On the contrary, the State of Mexico has seen important differences between sectors: six quarters after the start of the recovery, the services sector was below its previous peak by more than 1%, while secondary sector production was already 8% above that value. In this way, greater resistance in the services sector can explain the lesser impact of the recession in this state, while the rapid recovery may be due to strong growth in the secondary sector.

Figure 2. Cumulative Percentage Growth of the itaee in Mexico and The State of Mexico during the Current Cycle
Note: Abbreviations correspond to the headings in Table 2.
Source: Prepared by the authors based on inegi data.

In order to analyze employment dynamics, we used information for workers enrolled in the imss, taken through December 2010. To make the analysis comparable with the itaee, series for total, temporary and permanent workers were grouped in the same two sectors and in the total sector. The information relevant to the analysis is shown in Table 3 and Figure 3.

First, there is greater heterogeneity regarding the start and end dates of the recession in the different sectors and geographic spaces. Specifically, it can be seen that the effects of the recession were felt later in the services sector, which delayed the drop in total, temporary and permanent employment both on the national and state level. Likewise, the longer length of the recession in the state secondary sector of permanent employment was notable, and although to a lesser extent, for all types of employment in the national secondary sector. However, the combination of dates in other sectors helped the drop in total employment level off in July and May of 2009 in Mexico and The State of Mexico, respectively. Secondly, losses during the recession have been of different magnitude depending on the variables. In general, the data reflects greater decreases during the recession in secondary sector employment, especially on the national level, with a drop of 12.3%. On the contrary, the largest reductions in tertiary employment occurred in the State of Mexico, especially in temporary employment (-5.5%). Furthermore, temporary employment in the tertiary sector of the national economy not only rose during the recession period, but actually grew to a cumulative rate of 9.2%, which could reflect the business strategy of replacing permanent employees with temporary workers, given that the latter cost less.

Contrasting sector data shows a lower decrease in the general tertiary sector, which, given its weight for the economies in question, explains the cumulative moderate drop in total employment, which was below 4.2%. This dynamic is shown in the Figure 3 panels, where cumulative decreases starting at the peak and throughout the months of decline are given for permanent, temporary and total employment, respectively.

Recovery of employment has shown relatively elevated rates in all cases, especially the secondary sector, which has allowed recovery of the majority of jobs lost during the Great Recession. Data in Table 3 also shows that temporary job creation has grown at very high rates (at least 12.1% for the State of Mexico services sector), which may reflect transformations in the labor market in favor of cheaper employment.

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Published in Mexico, 2012-2018 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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