The Effect of Mexican Workforce Migration on the Mexican Maquiladora Labor Market

A great deal has been written about the effects of foreign migration on the wages of U.S. workers. However, little is known about the effects of Mexican interstate immigration (i.e., internal Mexican migration) and international return migration of labor and foreign capital on wages and employment in the maquiladora industry in Mexico. We examine these issues by first computing cost and demand functions for Mexican skilled and unskilled labor in the Textile maquiladora industry in 20 Mexican states and the Food, Beverage, and Tobacco industry in 10 Mexican states for 1998-2001. In both industries we find that the demand for skilled workers is more elastic than that for unskilled workers and that foreign direct investment is beneficial for skilled workers, increasing their demand and relative wage. Separately, using the 2000 Mexican Census, we estimate the effect of migration on the equilibrium wage and employment of each labor type in the manufacturing industry labor market. We find that interstate immigration and international return migration have a positive effect on wages. A combination of these two models allows calculation of the effects of labor and capital migration on the demand for each factor and changes in factor wage and employment shares. We find that wages and employment in the maquiladora industry have remained relatively constant due to substantial migrant inflows in all but one Mexican state, where substantial reductions in the wage of unskilled labor and the quantity of skilled labor have occurred.