Determinants of the Reserve Salary of Micro Entrepreneurs in Mexico

Abstract

ABSTRACT
The objective of this article is to analyze the determinants of the reserve salary of micro entrepreneurs
in Mexico. The reserve salary is considered to be the salary that micro entrepreneurs would be willing
to accept to close their business and receive a fixed salary. Data from the National Survey on Productivity
and Competitiveness of Micro, Small and Medium Enterprises are used and a crosssectional
model proposed. The results suggest that being a man, higher education, having social security,
investment and profits raise the reserve salary, while variables such as the age of the business,
number of employees and competition reduce it.
Keywords: Reserve salary, microenterprises, micro entrepreneurs
JEL classification: D21, M21 and L25