## 1. Legal Reform Milestones in Mexico to Achieve Gender Parity in Congress _________ 20

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---

### A. Introduction — Gender gaps overview
- Labor force participation:
  - Gender gap in labor force participation in Mexico estimated at about 32 percent in 2021, compared with an OECD average of 13.5 percent and the LA5 average of 23 percent.
  - Female labor force participation (FLFP) about 48 percent versus male participation about 81 percent.
  - FLFP increased since 2005, narrowing the participation gap by 10 percentage points.
- Wages and informality:
  - Gender gap in wages about 14 percent, slightly above the OECD average of 11.9 percent.
  - Informal sector employs more than half of Mexico’s workforce; informality rate about 0.55 (55 percent).
  - Gender gap in informal employment about 2 percent overall; gender informality rate gap: Data 0.06, Model 0.07.
- Education and hours:
  - Women in the labor force have on average more years of education than men across all income percentiles; non-economically active women have fewer years of education than men and economically active women.
  - Women on average work more hours per week than men due to carrying the bulk of unremunerated domestic work.
- Rural/urban differences:
  - Gender gaps more elevated in rural Mexico; participation gap narrowed by 10 percentage points in both urban and rural areas since 2005 but remains 11 percentage points higher in rural areas.
  - Labor informality is higher for women than men in urban areas; in rural areas there is virtually no gender gap in informality rates, though informality is overall significantly higher.

### B. Scope of the Selected Issues Paper
- Policy objectives explored:
  - Boost female labor force participation and formal employment.
  - Consider regional differences (urban vs rural).
  - Take stock of fiscal policies with gender implications implemented so far.
  - Analyze legal impediments to women’s economic empowerment, focusing on labor market reforms.

### C. Overlapping-generations model (OLG) — design and calibration
- Model features:
  - Small open economy with formal and informal sectors; government levies taxes on formal labor income, consumption of formal goods, and formal firms' profits.
  - Government expenditure allocated to education and formal goods.
  - Households are couples differentiated by gender, with two children in the young adult parents' phase.
  - Life stages: young adult parents, adults, seniors.
  - Decisions: consumption of formal and informal goods and labor participation in formal and informal sectors.
- Gender frictions incorporated:
  - (i) Social norms barriers: expenses and unpaid hours for household chores and care responsibilities represented as a utility cost linked to household income percentiles via a quadratic fit (parameters χ̅, χ0, χ1, χ2).
  - (ii) Lower returns to working hours and lower returns to experience for women (human capital accumulation parameter γs g differs by life cycle stage s and gender g).
  - (iii) Lower marginal productivities for women captured by parameters φ in production functions for formal and informal sectors.
- Calibration targets (Text Table 1: Data vs Model):
  - Labor force participation female-to-male ratio: Data 0.61, Model 0.67
  - Informality rate: Data 0.55, Model 0.53
  - Gender informality rate gap: Data 0.06, Model 0.07
  - Share of informal sector to GDP: Data 0.30, Model 0.30
  - Share of government expenditure to GDP: Data 0.18, Model 0.18
  - Share of public education expenditure to GDP: Data 0.03, Model 0.03
  - Revenues from formal sector to GDP: Data 0.07, Model 0.07
  - Debt-to-GDP ratio: Data 0.52, Model 0.60
  - Gini coefficient: Data 0.39, Model 0.38
- Heterogeneity:
  - Calibrations performed for Mexico overall, rural areas, urban areas to capture heterogeneity (education levels, number of children across income percentiles).

### D. Policy counterfactuals simulated
- Main policy variable:
  - Childcare policy modeled as a reduction in the utility cost associated with women’s household care, calibrated to raise FLFP by 10 percentage points.
- Complementary policies:
  - Education policy: minimum requirement of 10 years of education for the overall population.
  - Antidiscrimination policy: increases marginal productivity of women in the formal sector by reducing the parameter controlling the wage gap in the formal sector production function; calibrated to match increases in formal sector output observed under other policies.

### E. Key quantitative results — FLFP, informality, and regional impacts
- FLFP effects (aggregate):
  - Childcare policies alone increase FLFP by 10 percentage points.
  - Childcare combined with education increases FLFP by an additional 3 percentage points (total implied increase 13 percentage points).
  - Childcare combined with anti-discriminatory policies increases FLFP by an additional 1 percentage point (total implied increase 11 percentage points).
- Rural vs urban additional FLFP gains when combining policies with childcare:
  - Rural: education adds 5.5 percentage points; anti-discrimination adds 3.5 percentage points.
  - Urban: education adds 1.6 percentage points; anti-discrimination adds 0.5 percentage points.
- Informality effects:
  - Childcare policies increase female informality rate by 0.8 percentage points in the overall calibration.
  - Childcare-induced informality increases by 2.1 percentage points in rural areas and 1.2 percentage points in urban areas.
  - Childcare together with education or anti-discrimination: female informality rate declines by about 0.5 percentage point in the baseline calibration.
  - Combined policies reduce informality more strongly in rural areas: decline reaches 3.5 percentage points.
  - Urban declines in informality are 2 percentage points (education) and 2.5 percentage points (anti-discrimination).
- Mechanism:
  - Childcare policies lower the household utility cost of women working, but women entering work tend to have middle-low education and low formal-sector returns, pushing them into informality unless formal-sector returns are raised via education or anti-discrimination policies.

### F. Fiscal policy considerations and policy priorities
- Three broad fiscal policy measures:
  - Reduce barriers to female labor force participation and economic integration:
    - Address tax policy measures that distort incentives for secondary earners (typically women).
    - Tailor service and administrative procedures to small businesses, often disproportionately owned by women.
    - Expand childcare and parental leave policies that affect the cost of women working and labor participation decisions.
  - Directly tackle gender-based distributional issues:
    - Increase spending on education and health access to improve outcomes for women and girls.
  - Mobilize and monitor resources for tackling gender inequality:
    - Use targeted cash transfers (shown to boost female economic empowerment and more effective when paid to female heads of household).
    - Prefer general revenue mobilization reinvested in equity-enhancing spending over gender-differentiated tax relief.
    - Employ gender budgeting as a tool to ensure sufficient resources are allocated and utilized to tackle gender gaps.
- Data needs:
  - Need for better data to facilitate improved policy design and monitoring emphasized.

### G. Legal and institutional barriers and recommendations
- Legal progress and remaining challenges:
  - Mexico has made significant strides recognizing equal rights under law and removing many legal impediments to women’s economic empowerment.
  - Persistent gender disparities in labor force participation, wage earnings, and opportunities attributed to remaining legal barriers and implementation/enforcement challenges.
- Suggested legal and institutional reforms (high-level):
  - Remove legal impediments and strengthen implementation and enforcement across constitutional, property, family, labor, tax, public financial management domains.
  - Complement legal reform with policy incentives: leadership promotion, parental leave rights, childcare services.
  - Strengthen regulations to eliminate gender-based discrimination in the workplace, including elaboration and enforcement of “equal pay for work of equal value.”
  - Extend social security and pension law coverage for vulnerable women; consider lowering or removing minimum contribution periods and targeted pension supports.
  - Strengthen land ownership rights enforcement for women in rural areas and promote women’s representation in leadership positions in public and private sectors.

### Impact on formal sector output, growth, and welfare (section 22)
- Formal sector output growth:
  - Childcare policies alone: growth in formal output reaches 6.5 percent (aggregate).
  - Childcare together with education or anti-discriminatory policy: growth in formal output reaches about 9.5 percent.
  - Rural sector:
    - Childcare alone: formal output growth reaches 5.1 percent.
    - Childcare combined with other policies: output growth rises to 12.8 percent.
  - Urban sector:
    - Childcare alone: growth of 1.9 percent.
    - Childcare combined with other policies: growth of 5.9 percent.
- Explanation:
  - Larger effects when combining policies explained mainly by additional policies that disincentivize informality, pushing workers into the formal sector.
- Informality and gender (directional model outcomes):
  - Female and male informality rates presented as percentage-point differences from baseline for Total, Rural, Urban under:
    - Childcare
    - Childcare & education
    - Childcare & antidiscrimination
- Household welfare effects:
  - Welfare gains measured as utility growth from introducing policies during the initial stage of couples' life cycles versus baseline.
  - Combining childcare with anti-discrimination policies has the largest effect on household welfare.
  - Adding education improvements to childcare policies has a positive marginal effect on households in rural areas.
  - Household welfare growth (in percent, growth from baseline) reported for Total, Rural, Urban under:
    - Childcare
    - Childcare & education
    - Childcare & antidiscrimination
- Policy recommendation (summary):
  - Childcare policies increase FLFP but, when implemented in isolation, can lead to a rise in female labor informality, hindering productivity growth.
  - To realize full benefits, childcare should be complemented with policies that foster the formal sector:
    - Implement anti-discrimination policies in the formal labor sector.
    - Strengthen education (e.g., guarantee at least 10 years of education for all workers).
  - Improve quality of budget allocations and increase targeted spending to support combined policies.

### Revenue administration, gender, and the role of SAT (section 32)
- Revenue administration interventions:
  - Revenue administrations can reduce barriers to women’s employment, entrepreneurship, and trade by tailoring services, understanding access barriers, and reducing enforcement bias.
  - High informality among women increases the importance of revenue administration interventions.
- SAT data and practice gaps:
  - SAT collects gender-disaggregated tax compliance data but reports it does not undertake analysis of gender implications of tax administration or compliance, does not make adjustments to tax administration processes for specific gender needs, and does not design gender-targeted taxpayer education or awareness campaigns (OECD, 2020).
  - Exploiting already collected data could be low hanging fruit to address gender inequality.
- SAT employment practices:
  - SAT workforce majority female; less than one-third of executive positions staffed by women compared to an average of more than 40 percent in emerging market and advanced economies.
  - Recommendations to improve senior-level gender balance:
    - Identify barriers for women advancing to senior positions.
    - Promote flexible working arrangements (including flexible working hours and accommodation of regular remote working).
    - Embed employment practices to build a gender-balanced and inclusive workforce.
- Gender budgeting and public financial management strengths:
  - Mexico is advanced regionally in gender budgeting: gender perspective in National Development Plan, Federal Budget and Financial Responsibility Law, Transversal Annex identifying resources for gender equality, budget performance indicators disaggregated by sex, and comprehensive budget tagging to SDGs including gender.
- Areas to strengthen:
  1. Integrate Gender Impact Assessments (GIAs) ex ante into budget decision making to assess intended and unintended gender impacts before approval; enhance interinstitutional coordination (Ministry of Finance, INMUJERES, line ministries); make GIAs a regulatory requirement with quality review.
  2. Expand gender-disaggregated fiscal data: ensure administrative tax and expenditure data can be disaggregated by gender and used in GIAs; build on feasibility shown by gender incidence analysis of tax expenditures.
- Fiscal policy levers to reduce gender gaps (priorities reiterated):
  - Widen access to quality childcare services.
  - Bring parental and care leave practices in-line with OECD peers.
  - Remove the minimum weeks requirement for contributory pensions.
  - Use government-collected data to assess and address gender implications of tax and revenue administration policies.
  - Greater usage of gender-disaggregated data in policy formulation.
  - Deploy gender impact assessments prior to approval of budgets and new initiatives.

### Additional substantive issues from the SIP introduction (barriers and specific recommendations)
- Unpaid care and workplace discrimination:
  - Working-age women in Mexico spend 331.3 minutes per day on unpaid work, compared to men who spend 19.5 hours a week in unpaid care work (source comparisons within the SIP note both daily minutes and weekly hours in different places).
  - Women are fifty percent less likely than men to receive an equal wage for similar work; Mexico ranked 117th out of 146 countries for wage equality in the WEF’s Global Gender Gap Report 2023.
  - 21.7 percent of women aged 15 and older have suffered discrimination in the workplace (INEGI, 2021a); gender-based violence in the workplace remains high (INEGI, 2021b).
- Care reform and leave:
  - 2020 constitutional reform guarantees the right to ‘decent care’ and empowers Congress to enact a law creating a National Care System (Articles 4 and 73 of the Constitution).
  - Paid maternity leave in Mexico: 12 weeks (lags the OECD average by 2 months).
  - Father-specific parental leave in Mexico: 1 week (compared to an OECD average of around 10 weeks).
  - ILO Maternity Protection Convention No. 183 calls for a minimum of 14 weeks of maternity leave.
- Education and social protection:
  - Young people most likely to leave school without an upper secondary qualification at 44 percent (OECD, 2019 & 2023a).
  - Benito Juárez Basic Education Welfare Scholarship program (introduced in 2019) is paid per family, not per student; recommendation to introduce payments per student to promote girls’ school attendance.
  - Prior to the pandemic in 2018, around 40 percent of households with children/adolescents and a working-age household head did not have any social protection (Hannan et al, 2021).
  - Over one-third of the total population lived below CONEVAL’s poverty line in 2022.
- Representation, property, and financial inclusion:
  - Board and CEO representation: Only 9.7 percent of board seats are held by women and 1.6 percent of CEOs are women (Deloitte, 2022). In the financial sector, women’s participation in senior management and boards is 26 percent as of 2022.
  - Property and ejido rights: as of 2020, only 25.9 percent of ejidal communal parcel certificate holders were women, and only 7.4 percent of ejidal and communal entities were led by women (INMUJERES, 2020). 2023 amendment of the Agrarian Law established mandatory gender parity quotas for candidates to ejido commissariats and supervisory councils.
  - Financial services: equal access guaranteed by law; CNBV produced sex-disaggregated data and regulatory amendments (2021 Single Banking Circular) to promote credits to women.
- Tax law:
  - Tax laws drafted in gender neutral language; SAT reports no distinction in taxes between men and women but no gender-bias analysis has been conducted.
  - Targeted tax reforms: zero rating VAT on feminine hygiene products; “Régimen Simplificado de Confianza (RESICO)” intended to have a greater impact on women concentrated in informal sectors.
  - Recommendation: conduct ex-post studies and comprehensive gender-based assessments of tax measures and use taxpayer communication and education targeted to women.

*Source: 1mexea2023004 - IMF staff analysis as presented in the cited chapter.*

### 1. Legal Reform Milestones in Mexico to Achieve Gender Parity in Congress _________ 20

### 1. Legal Reform Milestones in Mexico to Achieve Gender Parity in Congress _________ 20

### A. Introduction — Gender gaps overview
- Gender gap in labor force participation in Mexico is estimated at about 32 percent in 2021, compared with an OECD average of 13.5 percent and the LA5 average of 23 percent.
- Gender gap in wages is about 14 percent, slightly above the OECD average of 11.9 percent.
- Informal sector employs more than half of Mexico’s workforce; gender gap in informal employment is about 2 percent.
- Female labor force participation (FLFP) increased since 2005, narrowing the participation gap by 10 percentage points; female participation is about 48 percent versus male participation about 81 percent.
- Women in the labor force have on average more years of education than men across all income percentiles; non-economically active women have fewer years of education than men and economically active women.
- Women on average work more hours per week than men due to carrying the bulk of unremunerated domestic work.
- Gender gaps are relatively more elevated in rural Mexico: the participation gap narrowed by 10 percentage points in both urban and rural areas since 2005 but remains 11 percentage points higher in rural areas.
- Labor informality is higher for women than men in urban areas; in rural areas there is virtually no gender gap in informality rates, though informality is overall significantly higher.

### B. Scope of the Selected Issues Paper
- Explores policy options to close gender gaps by:
  - Boosting female labor force participation and formal employment.
  - Considering regional differences (urban vs rural).
  - Taking stock of fiscal policies with gender implications implemented so far.
  - Analyzing legal impediments to women’s economic empowerment, focusing on labor market reforms.

### C. Overlapping-generations model (OLG) — design and calibration
- Model features:
  - Small open economy with formal and informal sectors.
  - Government levies taxes on formal labor income, consumption of formal goods, and formal firms' profits.
  - Government expenditure allocated to education and formal goods.
  - Households are couples differentiated by gender, with two children in the young adult parents' phase.
  - Life stages: young adult parents, adults, seniors.
  - Decisions include consumption of formal and informal goods and labor participation in formal and informal sectors.
- Gender frictions incorporated:
  - (i) Social norms barriers: expenses and unpaid hours for household chores and care responsibilities represented as a utility cost linked to household income percentiles via a quadratic fit (parameters χ̅, χ0, χ1, χ2).
  - (ii) Lower returns to working hours and lower returns to experience for women (human capital accumulation parameter γs g differs by life cycle stage s and gender g).
  - (iii) Lower marginal productivities for women captured by parameters φ in production functions for formal and informal sectors.
- Calibration targets (Text Table 1: Data vs Model):
  - Labor force participation female-to-male ratio: Data 0.61, Model 0.67
  - Informality rate: Data 0.55, Model 0.53
  - Gender informality rate gap: Data 0.06, Model 0.07
  - Share of informal sector to GDP: Data 0.30, Model 0.30
  - Share of government expenditure to GDP: Data 0.18, Model 0.18
  - Share of public education expenditure to GDP: Data 0.03, Model 0.03
  - Revenues from formal sector to GDP: Data 0.07, Model 0.07
  - Debt-to-GDP ratio: Data 0.52, Model 0.60
  - Gini coefficient: Data 0.39, Model 0.38
- Calibrations performed for: Mexico overall, rural areas, urban areas, to capture heterogeneity (education levels, number of children across income percentiles).

### D. Policy counterfactuals simulated
- Main policy variable: childcare policy modeled as a reduction in the utility cost associated with women’s household care, calibrated to raise FLFP by 10 percentage points.
- Complementary policies:
  - Education policy: minimum requirement of 10 years of education for the overall population.
  - Antidiscrimination policy: increases marginal productivity of women in the formal sector by reducing the parameter controlling the wage gap in the formal sector production function; calibrated to match increases in formal sector output observed under other policies.

### E. Key quantitative results — FLFP, informality, and differential regional impacts
- Aggregate FLFP effects:
  - Childcare policies alone increase FLFP by 10 percentage points.
  - Childcare combined with education increases FLFP by an additional 3 percentage points (total implied increase 13 percentage points).
  - Childcare combined with anti-discriminatory policies increases FLFP by an additional 1 percentage point (total implied increase 11 percentage points).
- Rural vs urban additional FLFP gains when combining policies with childcare:
  - Rural: education adds 5.5 percentage points; anti-discrimination adds 3.5 percentage points.
  - Urban: education adds 1.6 percentage points; anti-discrimination adds 0.5 percentage points.
- Informality effects:
  - Childcare policies increase female informality rate by 0.8 percentage points in the overall calibration.
  - Childcare-induced informality increases by 2.1 percentage points in rural areas and 1.2 percentage points in urban areas.
  - When childcare is implemented together with education or anti-discrimination policies, the female informality rate declines by about 0.5 percentage point in the baseline calibration.
  - Combined policies reduce informality more strongly in rural areas: decline reaches 3.5 percentage points.
  - In urban areas, declines in informality are 2 percentage points (education) and 2.5 percentage points (anti-discrimination).
- Mechanism: childcare policies lower the household utility cost of women working, but women entering work tend to have middle-low education and low formal-sector returns, pushing them into informality unless formal-sector returns are raised via education or anti-discrimination policies.

### F. Fiscal policy considerations and policy priorities (summary of Section C)
- Three broad and interrelated fiscal policy measures identified:
  - Reduce barriers to female labor force participation and economic integration:
    - Address tax policy measures that distort incentives for secondary earners (typically women).
    - Tailor service and administrative procedures to small businesses, often disproportionately owned by women.
    - Expand childcare and parental leave policies that affect the cost of women working and labor participation decisions.
  - Directly tackle gender-based distributional issues:
    - Increase spending on education and health access to improve outcomes for women and girls.
  - Mobilize and monitor resources for tackling gender inequality:
    - Use targeted cash transfers (shown to boost female economic empowerment and more effective when paid to female heads of household).
    - Prefer general revenue mobilization reinvested in equity-enhancing spending over gender-differentiated tax relief.
    - Employ gender budgeting as a tool to ensure sufficient resources are allocated and utilized to tackle gender gaps.
- Need for better data to facilitate improved policy design and monitoring emphasized.

### G. Legal and institutional barriers (summary of Section D)
- Mexico has made significant strides in recognizing equal rights under law and removing many legal impediments to women’s economic empowerment.
- Persistent gender disparities remain in labor force participation, wage earnings, and opportunities, attributed in part to remaining legal barriers as well as implementation and enforcement challenges.
- Section D proposes recommendations on legal and institutional reforms to further incentivize women to enter, remain, and advance in the workforce (detailed recommendations and analysis are contained in Section D of the source).

*Source: 1mexea2023004 - 1. Legal Reform Milestones in Mexico to Achieve Gender Parity in Congress _________ 20*

### 22.      The positive impact on economic growth from implementing childcare policies is

### 22.      The positive impact on economic growth from implementing childcare policies is 

### Impact on formal sector output and informality
- When implementing childcare policies alone, growth in formal output reaches 6.5 percent.
- When implementing childcare together with education or anti-discriminatory policy, growth in formal output reaches about 9.5 percent.
  - Footnote: the anti-discriminatory policy calibration matches the increase in formal output produced by the education policy to allow a fair comparison when implemented alongside the childcare policy.
- The larger effect from combining policies is explained mainly by additional policies that disincentivize informality, pushing workers into the formal sector.

### Rural and urban differences in output growth
- Rural sector:
  - Childcare policies alone: formal output growth reaches 5.1 percent.
  - Childcare combined with other policies: output growth rises to 12.8 percent.
  - Explanation: education levels are quite low across all income percentiles in rural areas; guaranteeing at least 10 years of education for all workers offers bigger potential for formal sector participation and formal output growth.
- Urban sector:
  - Childcare policy alone: growth of 1.9 percent.
  - Childcare combined with other policies: growth of 5.9 percent.

### Effects on informality by gender and area (directional outcomes from the model)
- Female informality rate: policy comparisons show percentage points differences from baseline across Total, Rural, Urban for:
  - Childcare
  - Childcare & education
  - Childcare & antidiscrimination
- Male informality rate: policy comparisons show percentage points differences from baseline across Total, Rural, Urban for:
  - Childcare
  - Childcare & education
  - Childcare & antidiscrimination
(Note: the source presents these as percentage-point differences from baseline and separate charts for female and male informality rates.)

### Household welfare effects
- Welfare gains are assessed by measuring utility growth from introducing these policies during the initial stage of couples' life cycles versus the baseline parameterization.
- Combining childcare with anti-discrimination policies has the largest effect on household welfare.
- Adding improvements in education outcomes to childcare policies has a positive marginal effect on households in rural areas.
- Household welfare growth (in percent, growth from baseline) is reported for:
  - Total, Rural, Urban under:
    - Childcare
    - Childcare & education
    - Childcare & antidiscrimination

### Summary conclusion and policy recommendation
- Childcare policies increase female labor force participation but, when implemented in isolation, can lead to a rise in female labor informality, thereby hindering productivity growth.
- To fully realize the benefits of higher female labor force participation, childcare policies should be complemented with policies that foster the formal sector — specifically:
  - Implementing anti-discrimination policies in the formal labor sector.
  - Strengthening education (e.g., guaranteeing at least 10 years of education for all workers).
- Improving the quality of budget allocations and increasing targeted spending to support these combined policies is paramount for closing gender gaps and creating a more balanced and productive workforce in Mexico.

---

### C. Fiscal policies to tackle gender gaps in Mexico — key findings and policy areas
- Fiscal policy objectives for addressing gender gaps:
  - (i) reduction of barriers to female labor force participation and economic integration;
  - (ii) addressing gender-based distributional issues; and
  - (iii) mobilizing and monitoring resources for tackling gender inequality.
- An overarching need: better data for pinpointing where gender gaps lie and for policy design.

### Expenditure policy priorities (selected areas and findings)
- Education:
  - Young people are the most likely to leave school without an upper secondary qualification at 44 percent (OECD, 2019 & 2023a).
  - Benito Juárez Basic Education Welfare Scholarship program (introduced in 2019) is paid per family, not per student, creating scope for gender biases in which children receive educational support.
  - Recommendation: introducing payments per student could promote school attendance and increase impact, especially for girls.
  - Additional needs: address teacher-to-student ratios and other areas where increased spending is needed to close gaps with OECD peers.
- Childcare and Care Leave:
  - Paid maternity leave in Mexico: 12 weeks (lags the OECD average by 2 months).
  - Father-specific parental leave in Mexico: 1 week (compared to an OECD average of around 10 weeks).
  - Working-age women in Mexico spend 331.3 minutes per day on unpaid work (more than double men), with a large share on caring activities (OECD, 2023a).
  - Federal government has begun to scope and design a national childcare service and commissioned INEGI to conduct a survey of childcare demand for planning.
  - Fiscal constraint: the binding constraint for care policy reforms is likely the fiscal cost; tax policies can play a role in financing these outlays.
- Social Protection:
  - Prior to the pandemic in 2018, around 40 percent of households with children/adolescents and a working-age household head did not have any social protection (Hannan et al, 2021).
  - Over one-third of the total population lived below CONEVAL’s poverty line in 2022.
  - Mexico’s history with conditional cash transfers (PROGRESA/Oportunidades) shows payments to women increased intra-household bargaining power and improved household outcomes; recent design choices (e.g., Benito Juárez scholarship paid per family) may miss gender-differentiated impacts.
- Pensions:
  - Recent pension reforms reduced pensioner poverty and gender gaps in pensioner poverty, but older women still fare worse than older men.
  - Minimum weeks of contribution requirement creates sharp non-linearities in pension entitlements and may disproportionately impact women with interrupted working histories due to caring responsibilities.
  - Recommendation: lowering—or removing—the minimum contribution period and targeted spending measures (e.g., per-child pension bonuses) could improve gender equity.

### Tax and revenue administration policies
- Explicit and implicit gender biases in the tax system can entrench gender inequality; household-level taxation and family-based provisions often discourage female labor force participation.
- Recent reforms:
  - 2022: equalization of VAT treatment of feminine hygiene products with other healthcare products (SHCP, 2021).
  - Mexico’s individual basis for personal income tax avoids a common design flaw that disincentivizes secondary earners.
- Gaps and recommendations:
  - Lack of extensive analysis of gender implications of the tax code; a comprehensive, data-driven tax policy strategy could identify implicit biases and opportunities to support women’s labor force participation.
  - The federal government has disaggregated tax data available (2020) and publishes gender-disaggregated statistics in its tax expenditure analysis (SHCP, 2023).
  - Given Mexico’s comparatively low revenue-to-GDP ratio, raising revenues to invest in targeted improvements in education, health, and social protection can support gender-equity objectives; ensure revenue mobilization is calibrated to avoid entrenching gender biases.

*Source: 1mexea2023004 - 22.      The positive impact on economic growth from implementing childcare policies is*

### 32.      The Mexican revenue authority could help improve women’s economic integration by

### 1mexea2023004 - 32.      The Mexican revenue authority could help improve women’s economic integration by

### Revenue administration role in gender equity
- Revenue administrations can influence gender equity by administering tax laws in a way that reduces barriers to women’s employment, entrepreneurship, and trade.
- Key actions for revenue authorities include:
  - understanding the barriers that prevent women from accessing systems,
  - tailoring services and products for women taxpayers and traders,
  - reducing enforcement bias against women.
- Mexico context: notable share of women in informal employment increases the importance of revenue administration interventions.
- International examples: revenue authorities in countries such as Australia and Jamaica have developed schemes to support small businesses, in part due to the high proportion of women owning and operating them.
- Data gap and opportunity:
  - Despite reporting collecting gender-disaggregated tax compliance data, Mexico’s Servicio de Administración Tributaria (SAT) also reported that it does not undertake   any analysis of the gender implications of tax administration or compliance, does not make   any adjustments to tax administration processes to respond to the needs of a specific gender, and does not design any gender targeted taxpayer education or awareness campaigns (OECD, 2020).
  - Exploiting already collected data could represent low hanging fruit to understand and tackle specific aspects of gender inequality.

### SAT employment practices and internal gender balance
- Current situation:
  - SAT has a workforce that is majority female.
  - Less than one-third of executive positions are staffed by women compared to an average of more than 40 percent in emerging market and advanced economies.
  - SAT trails OECD peers as well as peers in the IMF’s Western Hemisphere Department constituency (see Figure 3).
- Policy recommendations to improve senior-level gender balance:
  - identify specific barriers for women as they move up the career ladder,
  - promote flexible working arrangements (including flexible working hours and accommodation of regular remote working) to enable women to take up senior positions,
  - embed appropriate employment practices to build a gender-balanced and inclusive workforce.
- Evidence: Baer et al (2023) find that flexible work arrangements are associated with higher proportions of female staff members and higher proportions of women executives.

### Public financial management and gender budgeting
- Mexico’s strengths:
  - Mexico has embraced gender budgeting and is one of the most advanced practices in the region.
  - The National Development Plan must be formulated with a cross-cutting gender perspective.
  - The Federal Budget and Financial Responsibility Law: resources assigned to budget programs and investments for addressing equality between women and men are identified in the budget and the performance evaluation system, and cannot be removed or diminished.
  - A cross-cutting Annex to the budget presents the programs for gender equality.
  - Gender perspective incorporated into program structure and gender-related indicators into the performance evaluation system with in-year and end-year reporting.
  - Comprehensive budget tagging to Sustainable Development Goals (SDGs) including gender, linked to budget performance information (Alonso-Albarran et al., 2021).

- Areas for strengthening (two priority areas):
  1. Integration of a gender lens into the budget decision making process through deployment of Gender Impact Assessments (GIAs):
     - Ex ante GIAs could help policymakers better understand intended and unintended impacts on gender equality before policies are approved.
     - GIAs should be conducted before new proposals or budget submissions that modify or remove existing programs.
     - Enhancing GIAs would improve the quality of gender budgeting, broaden the programs included in the Annex of Gender Equality in the budget, and improve the usefulness of monitoring gender-related expenditure.
     - Supporting framework should rely on enhanced interinstitutional coordination between the Ministry of Finance (in charge of the budget), INMUJERES (in charge of gender equality policy and planning) and the line ministries (in charge of budget submissions).
     - Gender impact assessments would have to be presented by line ministries with assistance of INMUJERES and with the quality review of the Ministry of Finance.
     - Regulations can embed this practice to make it more sustainable over time.
  2. Gender disaggregated data:
     - Gender disaggregated statistics can enhance the soundness of GIAs and help construct credible performance indicators.
     - While INEGI collects a range of data on gender and related issues, disaggregation of fiscal data along gender lines appears less common.
     - Ensuring administrative tax and expenditure data can be disaggregated by gender and utilized in GIAs is an area for improvement.
     - The gender incidence analysis of tax expenditures in the government’s annual report on tax expenditures suggests feasibility in Mexico.
     - Close working with INEGI, such as the recent childcare demand survey, could augment data available for policy making.

### Conclusion: fiscal policy levers to reduce gender gaps
- Mexico has committed to addressing gender gaps and adopted policy innovations (gender budgeting, conditional cash transfers, education policy, pensions reforms).
- Remaining priorities and recommended fiscal reforms:
  - widening access to quality childcare services,
  - bringing parental and care leave practices in-line with OECD peers,
  - removing the minimum weeks requirement for contributory pensions,
  - using government-collected data to assess and address gender implications of tax and revenue administration policies,
  - greater usage of gender-disaggregated data in policy formulation,
  - deploying gender impact assessments prior to approval of budgets and new initiatives.

### Legal and institutional context to support women’s economic empowerment
- Rationale:
  - Removing legal barriers and providing incentives for women’s economic empowerment is key for positive macroeconomic outcomes.
  - Legal impediments (constitutional, property, family, labor, tax, public financial management) and customary norms can prevent full economic empowerment.
  - Holistic legal reform combined with robust implementation and enforcement, and policy incentives (leadership promotion, parental leave rights, childcare services), is critical.
- Constitutional and civil rights in Mexico:
  - The Mexican Constitution recognizes the right to gender equality and requires the Mexican State to take affirmative action to eliminate gender-based discrimination.
  - Mexico has ratified international treaties such as CEDAW.
  - Nationality Law grants married women the same rights as men to acquire, change and retain nationality, and to confer nationality to spouses and children.
  - Equal administrative procedures for national identification documents and passports; no discriminatory travel restrictions for women.
- Political participation advances:
  - Legislated gender quotas achieved gender parity in Mexico’s Congress in the 2018 election through phased legal reforms and enforcement measures (see Box 1: six reform milestones from 1993 to 2014 culminating in mandatory 50 percent gender quota).
- Labor law protections and remaining challenges:
  - Law explicitly and comprehensively prohibits discrimination in employment based on gender.
  - Married women can be hired in the same way as men; no restrictions on women working in "dangerous" fields or at night; dismissal of pregnant workers is prohibited.
  - Despite legal protections, factors remain that may hamper women’s integration into labor force participation (further analysis continues beyond the provided excerpt).

*Source: IMF staff analysis as presented in the cited chapter.*

### introduction of this SIP, women in Mexico continue to suffer from several barriers for  integration

### introduction of this SIP, women in Mexico continue to suffer from several barriers for  integration

### Labor force participation and unpaid care
- On average women work 48.5 hours a week in unpaid care work, compared to men who only work 19.5 hours a week (PROIGUALDAD, 2020).
- Women are fifty percent less likely than men to receive an equal wage for similar work (Mexico is ranked 117th out of 146 countries for wage equality in the WEF’s Global Gender Gap Report 2023).
- Discrimination incidents in the workplace are frequent: 21.7 percent of women aged 15 and older have suffered discrimination in the workplace (INEGI, 2021a).
- Gender-based violence in the workplace remains high (INEGI, 2021b).

### Policy and legal recommendations to improve substantive equality in the labor market
- Ensure the provision of a comprehensive care system.
  - 2020 constitutional reform guarantees the right to ‘decent care’ and empowers Congress to enact a law creating a National Care System defining competencies among the Federation, states and municipalities (Articles 4 and 73 of the Constitution).
  - The right to care was recognized in 2017 in the Constitution of the City of Mexico.
  - Provision of quality childcare programs is critical for boosting women’s labor force participation and addressing unequal distribution of unpaid care work.
  - Efforts should support legislative initiatives defining state (federal, state and local), private sector and community responsibilities to reduce fragmentation of services.

- Provide adequate maternity and paternity leave, in line with international commitments.
  - Paid maternity leave of 12 weeks is mandated by law.
  - ILO Maternity Protection Convention No. 183 (ratified by Mexico) calls for an increase to a minimum of 14 weeks of maternity leave after childbirth.
  - Paternity leave is provided by law for a period of only five days.
  - Judicial rulings have recognized fathers’ rights to paternity leave equal to mothers in some cases; example: 2022 Electoral Tribunal ruling directed INE to modify statutes to recognize an equal period of 90 days for paternity leave; similar modifications were introduced to Supreme Court statutes.

- Strengthen the legal provision of “equal pay for work of equal value” and its implementation.
  - The right of ‘equal pay’ is recognized in the Constitution and Federal Labor Law, but the principle has not been further elaborated in primary or secondary legislation.
  - Pay discrimination practices remain prevalent and are challenging to uncover; paucity of defined criteria hampers pay equity claims.
  - Some jurisdictions have introduced legal provisions defining “equal pay for work of equal value” using “objective” criteria to assess comparable value of different jobs.

- Strengthen regulations to eliminate gender-based discrimination in the workplace.
  - 2015 Norm for Labor Equality and Non-Discrimination (NMX-R-025-SCFI-2015) created a voluntary certification process requiring: equality and non-discrimination policies; monitoring implementation; gender lens for recruitment, selection, mobility and training; gender-neutral job classifications and pay scales; breastfeeding spaces, childcare services, and flexible work arrangements.
  - As of May 2020, certified entities in the private sector reached 33 percent, including only 1 percent of financial sector entities.
  - Consider mandating the norm with tailored requisites by size/type of entity, phased implementation, and assignment of monitoring and enforcement responsibilities to federal, state and local authorities.

- Extend social security and pension law for the most vulnerable.
  - Six of every ten women within an economically active population lack access to formal employment opportunities (INEGI, 2019).
  - Women are overrepresented in precarious and low-paying informal employment: 99.2 percent of domestic workers lack a written contract that outlines job duties, working hours, benefits, and vacation entitlements (INEGI, 2021).
  - 2018 Supreme Court precedent required IMSS to pilot a distinct social security framework for domestic workers (UNWomen, 2020).

### Representation and leadership
- Public sector progress vs private sector lag:
  - Only 9.7 percent of board seats are held by women and 1.6 percent of CEOs are women (Deloitte, 2022).
  - In the financial sector, women’s participation in senior management and boards is higher at 26 percent, as of 2022, attributed to disclosure requirements by CNBV and coordination by CIIGEF.
- Possible legal reforms to empower women in leadership include:
  - Requiring disclosure of gender composition of boards and/or diversity policies.
  - Encouraging voluntary targets for gender diversity on boards and/or in senior management.
  - Setting minimum quotas of women on boards supported by law, with careful design on scope, timelines, and penalties for non-compliance.

### Family law, child marriage, and access to justice
- Family law rights:
  - Women have equal legal rights as men in the household, including over assets upon marriage; no legal mandates for a married woman to obey her husband.
  - Women may be heads of household, legal guardians, remarry, and receive child custody following divorce, though they do not have the same grounds to initiate divorce as men.
- Child marriage and enforcement:
  - 2019 Federal Civil Code reforms set minimum legal age for marriage at 18 years, without exception or legal waiver.
  - Rates of child marriage have not decreased measurably, possibly indicating a shift to informal, illegal unions prevalent among rural, poor, indigenous and/or less-educated girls and adolescents.
  - 2023 Criminal Code reform introduced an autonomous criminal type forced cohabitation with minors to strengthen enforcement.
- Barriers to justice:
  - Constitution guarantees full protection of rights and equal evidentiary weight of women’s testimony.
  - Women face impediments to accessible and affordable legal advice and representation, including physical and linguistic barriers in rural areas.
  - Number of public prosecutor's offices specialized in handling gender-related cases is inadequate; challenges include lack of capacity, training, resources, and work overload in courts and public defenders’ offices.

### Property rights, land, and financial inclusion
- Property law and rights:
  - Legal framework grants women the right to collect, own, manage and transfer assets, including during marriage; equal ownership rights over movable and immovable assets; equal administrative authority during marriage; equal inheritance rights.
  - Ejido rights recognize usufruct for both women and men.
- Social norms limit exercise of rights, especially in rural areas:
  - As of 2020, only 25.9 percent of ejidal communal parcel certificate holders were women, and only 7.4 percent of ejidal and communal entities were led by women (INMUJERES, 2020).
  - 2023 amendment of the Agrarian Law established mandatory gender parity quotas for candidates to ejido commissariats and supervisory councils and mandated equal composition of commissions and auxiliary secretariats of the ejido.
- Financial services access:
  - Equal access to financial services is guaranteed by law; no legal impediments for a woman to open a bank account, sign a contract or register a business in the same way as a man.
  - Law of Credit Institutions requires development banking to promote gender equality and financial inclusion.
  - CNBV has produced sex-disaggregated data and executed regulatory amendments for loan loss reserves to promote credits to women (2021 Single Banking Circular).
  - Discrimination complaints are channeled through CONDUSEF and CONAPRED.
  - Consideration of special legislation defining discriminatory practices in financial services could facilitate enforcement and change social norms.

### Tax law and gender bias
- Tax laws are drafted in gender neutral language; SAT reports no distinction in taxes between men and women, but no analysis has been conducted to expose implicit bias.
- Targeted tax reforms adopted:
  - Zero rating VAT on feminine hygiene products.
  - Newly introduced simplified tax regime “Régimen Simplificado de Confianza (RESICO)” is considered by SAT to have a greater impact on women concentrated in informal sectors.
- Need for gender-based assessment of tax measures:
  - Ex-post studies recommended to evaluate effectiveness (e.g., whether zero VAT on feminine products increased affordability or producer/distributor margins) and to compare with direct support measures.
- Taxpayer communication and education:
  - SAT engages in taxpayer information programs for women, directly or with organizations focusing on empowering or educating women.

*Source: 1mexea2023004 - introduction of this SIP, women in Mexico continue to suffer from several barriers for  integration*

### 52.      Mexico embarked on important reforms to institutionalize the gender budgeting

### Mexico embarked on important reforms to institutionalize the gender budgeting process

### Legal foundations and institutional reforms
- Implementation of gender budgeting began in the late 90s, spearheaded by the legislature (Equality and Gender Committee in the Chamber of Deputies) and civil society organizations.
- Since 2006, several reforms were adopted to the Federal Budget and Fiscal Responsibility Law, Planning Law, and the General Law for Equality between Women and Men to support gender budgeting at federal and local levels.
- Reforms cover the fiscal strategy and planning phase, budget preparation, monitoring of budget execution, reporting and external audits, and accountability to the Legislature.

### Box 2 — Key legal underpinnings in Mexico’s PFM frameworks for addressing gender gaps
- National planning
  - Gender equality is recognized as a legal principle for the preparation of the National Development Plan.
  - INMUJERES is required to prepare a medium-term special gender national plan (PROIGUALDAD).
  - PROIGUALDAD 2020-2024 specifies for first-time actions, responsible entities for execution, and responsible entities for coordination and monitoring.
- Budget formulation
  - Gender equality is explicitly recognized as a budget principle in the Federal Budget and Fiscal Responsibility Law.
  - The General Law for Equality between Women and Men mandates that the Federation’s budget include resources for compliance with the gender national plan.
  - Institutional budget proposals must incorporate objectives, results and indicators related to three categories: i) promote equality between women and men, ii) the eradication of gender violence and iii) any form of gender discrimination.
  - The MoF issues budgetary guidelines to integrate the gender perspective into policies and programs and disaggregated indicators to measure expected impacts.
  - The Ministry of Economy, through COFEMER, together with INMUJERES, issued guidelines for incorporating the gender perspective into budget execution of federal programs, recognizing the need for affirmative action and special temporary measures where appropriate.
- Annual budget law
  - The draft annual budget law submitted to Congress must include a Transversal Annex 13 (Expenditures for Equality Between Women and Men) identifying resources allocated for the promotion of gender equality and specifying the methodology, variables and formulas used.
  - In practice, there are no explicit criteria or guidelines to determine which budget programs should be incorporated into Annex 13; this is left to spending agencies’ discretion and coordination with INMUJERES during budget preparation.
- Limits to budget reallocations
  - The law states any decrease in allocation of budget programs aimed at addressing equality between women and men must be accompanied by the opinion of the Chamber of Deputies.
- Budget execution reports
  - The MoF must prepare quarterly budget execution reports and submit them to the Chamber of Deputies, including indicators (disaggregated by sex) identifying beneficiaries of programs or other factors to assess impact and incidence of women’s programs.
  - The Annual Public Account should include the evolution of public spending in the transversal annexes.
- External controls
  - The Superior Audit of the Federation (ASF) must: i) check compliance on international commitments, national legislation, policy and action plans for gender equality; ii) conduct ex-post assessment of gender programs and initiatives; iii) evaluate mainstreaming of gender objectives into budgetary processes and use of funds; iv) detect design and implementation gaps to strengthen future policies; and v) conduct compliance audits to determine ministries’ compliance with gender budgeting guidelines.
- Source attribution within Box 2: "IMF staff based on the review of the relevant legislation."

### Implementation progress and observable gaps
- Implementation of reforms is advancing, but gaps remain; Mexico could strengthen implementation of the current legal framework.
- Key gaps identified for regulatory or legal clarification:
  - Enhancing inter-institutional coordination so national gender strategies (PROIGUALDAD) are integrated into budget preparation.
    - INMUJERES operates via memoranda of understanding with federal, state and local entities; since its creation in 2001 several laws assigned additional responsibilities without corresponding amendments to the INMUJERES Law.
    - INMUJERES could benefit from more robust competences for monitoring, evaluating and assessing integration of gender policies defined by PROIGUALDAD.
    - The calendar for preparation of sectorial plans does not allow PROIGUALDAD gender priorities to be mainstreamed into sectorial programs.
  - Defining clear and robust criteria to classify and tag budget programs with a gender perspective.
    - ASF Evaluation on Public Policy on Gender Equality for the period 2007-2017 (No. 1587-DS) observed implementation challenges: Annex 13 does not cover all spending agencies with responsibilities assigned by PROIGUALDAD.
    - As of 2017, only 22.5 percent of entities had incorporated the gender perspective in their budget programs.
    - ASF highlighted lack of coordination between INMUJERES, the MoF, and Federal Administration entities to define criteria for which programs should be incorporated to Annex 13.
    - ASF found the three-category classification mandated by Article 27 of the Federal Budget and Fiscal Responsibility Law does not allow more granular identification of objectives and indicators for gender equality.
    - Challenges were more pronounced for autonomous bodies (Legislature and Judicial branches) due to lack of guidance in the law on procedures to integrate gender considerations into institutional budgets and on responsible entities for coordination.
  - Protecting budget allocations of gender-related programs during budget execution.
    - ASF reported decreases in appropriations of budget programs included in Annex 13 during budget execution in the 2007-2017 period.
    - No information was found on whether the opinion of the Chamber of Deputies was requested as mandated by law.
    - Authorities interpret the legal provision as prohibition to decrease the nominal amount of Annex 13 from one fiscal year to the other, rather than a limitation to in-year reallocations.

### Conclusion: progress, outcomes, and further priorities
- Progress and outcomes
  - Mexico has made significant progress removing legal impediments to women’s economic empowerment; women have equal rights under the law concerning movement, work, marriage, ownership, inheritance, and business creation and operation.
  - Mexico increased women’s participation in political and decision-making processes by imposing mandatory quotas for elected positions within the three branches of the federal government and local government.
  - Gender budgeting reforms have been institutionalized through a comprehensive legal framework requiring identification, monitoring and reporting of resources allocated to programs promoting gender equality.
  - Mexico achieved high rankings in international indices; for example, in the World Bank’s Women, Business and the Law Index, Mexico enjoys an 88.8 rating on a scale of 100.
- Remaining priorities and suggested reforms
  - Strengthen implementation and enforcement of existing legislation and pursue targeted legal reform to close remaining gender gaps, including addressing social and cultural norms that constrain women’s exercise of legal rights.
  - Consider providing for paid maternity and paternity leave in line with international commitments.
  - Ensure provision of adequate childcare services to address the disproportionate burden on women of unpaid care work.
  - Strengthen the principle of equal pay for work of equal value.
  - Strengthen implementation of land ownership rights for women in rural areas.
  - Promote women’s representation in leadership positions in the public and private sectors.
  - In fiscal law: undertake a comprehensive diagnostic of tax laws for potential gender biases in tax legislation.
  - Develop regulations to: enhance integration of national gender strategies within the budget process; provide clear and robust criteria for classification and tagging of budget programs with a gender perspective; safeguard those resources from in-year budget modifications during budget execution; strengthen accountability through the legislature and external audit.

*Source: IMF staff based on the review of the relevant legislation (content unit 1mexea2023004).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1mexea2023004.pdf_