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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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File URL: http://repec.org/esLATM04/up.6441.1083007066.pdf
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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. Robert E. B. Lucas, 1994. "Internal Migration in Developing Countries," Boston University - Institute for Economic Development 43, Boston University, Institute for Economic Development.
  2. David Mckenzie & Hillel Rapoport, 2004. "Network Effects and the Dynamics of Migration and Inequality: Theory and Evidence from Mexico," Working Papers 2004-3, Bar-Ilan University, Department of Economics.
  3. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
  4. 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.
  5. 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.
  6. Daniel Chiquiar & Gordon H. Hanson, 2002. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," NBER Working Papers 9242, National Bureau of Economic Research, Inc.
  7. Katharine Donato & Jorge Durand & Douglas Massey, 1992. "Stemming the tide? Assessing the deterrent effects of the immigration reform and control act," Demography, Springer, vol. 29(2), pages 139-157, May.
  8. 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.
  9. repec:cup:cbooks:9780521331494 is not listed on IDEAS
  10. Gordon H. Hanson & Antonio Spilimbergo, 1996. "Illegal Immigration, Border Enforcement, and Relative Wages: Evidence from Apprehensions at the U.S.-Mexico Border," Research Department Publications 4036, Inter-American Development Bank, Research Department.
  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. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, November.
  13. 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.
  14. 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.
  15. 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.
  16. repec:cup:cbooks:9780521589857 is not listed on IDEAS
  17. 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.
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