Endogenous Selection, Migration and Occupation Outcomes for Rural Southern Mexicans

This article integrates theory on migration and labor outcomes--including attention to network effects--and a novel econometric design to explicitly account for the selection-based dimensions of these endogenous relationships. We use a Mixed Nonlinear Endogenous Switching Regression to test the causal hypothesis that migration within Mexico and to the US affects occupation outcomes while also probing the role of endogenous selection. The dataset from Southern rural Mexico contains detailed information on migration, return migration, and occupation outcomes for working-age females and males. Our empirical findings are consistent with previous research that demonstrate heterogeneity in migration selection processes and gendered patterns of community migration networks and labor market outcomes. The value of an endogenous switching approach is highlighted by hypothesis tests that reveal outcomes that cannot be recovered in a standard two-stage sample selection estimation. The first is the negative and statistically significant evidence of endogeneity of migration and occupation for both females and males driven by unobserved heterogeneity, perhaps associated with non-pecuniary motives such as family reunification efforts. The other is unambiguous causal evidence that occupational outcomes are positively influenced by both migration and return migration, especially for females. On average, migration and return migration increase the probability of upward occupational mobility by 55 to 62% for females and 44 to 21% for males.