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Migration, Trade and FDI in Mexico

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  • William Maloney
  • Patricio Aroca

Abstract

Part of the rationale for NAFTA was that it would increase trade and FDI flows, creating jobs and reducing migration to the US. Since poor data on illegal flows to the US makes direct measurement difficult, this paper instead evaluates the mechanism behind these predictions using data on migration within Mexico where the census data permit careful analysis. We offer the first specifications for migration within Mexico incorporating measures of cost of living, amenities and networks. Contrary to much of the literature, labor market variables enter very significantly and as predicted once we attempt to control for substitutions vs. credit constraint effects. FDI and trade variables deter migration and appear to work through the labor market. Finally, we generate some tentative inferences about the impact on Mexico-US migration and find it to be of important magnitude.

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Paper provided by Econometric Society in its series Econometric Society 2004 Latin American Meetings with number 329.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:latm04:329

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Keywords: Migration; Labor Market adjustment;

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References

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  1. Rivera-Batiz, Francisco L, 1986. "Can Border Industries Be a Substitute for Immigration?," American Economic Review, American Economic Association, vol. 76(2), pages 263-68, May.
  2. Gordon H. Hanson & Antonio Spilimbergo, 1996. "Illegal Immigration, Border Enforcement, and Relative Wages: Evidence from Apprehensions at the U.S.-Mexico Border," RES Working Papers 4036, Inter-American Development Bank, Research Department.
  3. de Melo, Jaime & Ettinger, Charles & Faini, Riccardo, 1997. "Globalisation and Migratory Pressures from Developing Countries: A Simulation Analysis," CEPR Discussion Papers 1660, C.E.P.R. Discussion Papers.
  4. Jonathan S. Leonard & Rachel McCulloch, 1991. "Foreign-Owned Businesses in the United States," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 261-283 National Bureau of Economic Research, Inc.
  5. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
  6. Mckenzie, David & Rapoport, Hillel, 2007. "Network effects and the dynamics of migration and inequality: Theory and evidence from Mexico," Journal of Development Economics, Elsevier, vol. 84(1), pages 1-24, September.
  7. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  8. Robert E. B. Lucas, 1994. "Internal Migration in Developing Countries," Boston University - Institute for Economic Development 43, Boston University, Institute for Economic Development.
  9. Daniel Chiquiar & Gordon H. Hanson, 2005. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 239-281, April.
  10. Hanson, Gordon H, 1997. "Increasing Returns, Trade and the Regional Structure of Wages," Economic Journal, Royal Economic Society, vol. 107(440), pages 113-33, January.
  11. Markusen, James R & Venables, Anthony J, 1997. "The Role of Multinational Firms in the Wage-Gap Debate," Review of International Economics, Wiley Blackwell, vol. 5(4), pages 435-51, November.
  12. Stark, Oded & Taylor, J Edward, 1991. "Migration Incentives, Migration Types: The Role of Relative Deprivation," Economic Journal, Royal Economic Society, vol. 101(408), pages 1163-78, September.
  13. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
  14. James R. Markusen & Stephen Zahniser, 1997. "Liberalization and Incentives for Labor Migration: Theory with Applications to NAFTA," NBER Working Papers 6232, National Bureau of Economic Research, Inc.
  15. Vanderkamp, John, 1971. "Migration Flows, Their Determinants and the Effects of Return Migration," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1012-31, Sept.-Oct.
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Cited by:
  1. Frédéric Docquier & Elisabetta Lodigiani, 2010. "Skilled Migration and Business Networks," Open Economies Review, Springer, vol. 21(4), pages 565-588, September.
  2. Alexander Schejtman & Julio A. Berdegué, 2006. "El Impacto Social de la Integración Regional en América Latina Rural," IDB Publications 9125, Inter-American Development Bank.

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