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Migration, Trade and FDI in Mexico

  • William Maloney
  • Patricio Aroca

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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  1. 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.
  2. 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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  8. 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.
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  13. Stark, Oded & Taylor, J. Edward, 1990. "Migration Incentives, Migration Types: The Role Of Relative Deprivation," Working Papers 225854, University of California, Davis, Department of Agricultural and Resource Economics.
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