From a health crisis to economic and labor crises: Spatial patterns of the impact of COVID-19 on formal employment in Mexico

Abstract

After a brief review of the implications for Mexico of the influenza A (H1N1) pandemic in 2009 and similar studies on the impact of COVID-19 on the labor market, this study addresses the early development of the epidemic in Mexico and the actions taken by the federal government to face this issue. Its impacts on the economy in general and on the labor market in particular are analyzed below. The focus is on its consequences on formal employment based on data from the Mexican Social Security Institute (IMSS) to determine spatial patterns and their relationship with economic activities. The dramatic loss of jobs in traditional beach+sun resorts that hit particularly hard the Cancun, Riviera Maya and Riviera Nayarit destinations has occurred along with a crisis in the accomodation and catering services in large cities such as Mexico City. The near-total closure of manufacturing activities, particularly in the automotive industry, has severely affected the Bajío corridor, while the northern border underwent a major industrial diversification triggered by the crisis. Construction is also seriously affected, impacting both the scarce formal employment in small rural municipalities and jobs in large metropolitan areas and cities; especially the Monterrey metropolitan zone and oil-extraction areas such as Cd. del Carmen and Tampico-Altamira-Cd. Madero. Last, the decline in formal employment in certain agricultural regions, mainly areas of commercial agriculture, is not attributable to the epidemic but to the seasonal nature of this activity.