Neighborhood Marginalization and Labor Market Disparities in Mexico

This study examines the relationship between neighborhood marginalization and labor market outcomes in Mexico from 2010 to 2020. Using census data combined with CONAPO marginalization index, we estimate two-way fixed-effects models controlling for individual, labor market, municipal, and temporal factors. A 10-point increase in marginalization is associated with a 1.1% rise in participation, no change in total employment, a 7.6% decline in formal employment, a 5.4% increase in informal employment, and a 15.1% decrease in wages. These patterns are robust across commuting distance, distance to the state capital, urban samples, and lowmarginalization-variance municipalities. Non-linear results show that participation rises in highly marginalized deciles, while formal employment and wages fall sharply. Men experience a larger wage penalty (-16.0%) than women (-12.6%), while women are more likely to work informally. Older workers (55–65) show the largest participation increase but also the steepest wage loss. The findings highlight persistent structural barriers limiting access to quality jobs and earnings, as well as sharp heterogeneities across gender, age groups, and spatial contexts, which can help inform more targeted and place-based policy interventions.