Mexican Migration to the United States: Selection, Assignment, and Welfare

This paper analyzes how migration policy reforms shape migrants' self-selection and, through that, affect welfare and wage inequality in the sending and destination countries. First, we document that the distribution of wages among U.S. workers dominates the distribution of wages among Mexican immigrants in the hazard rate order. Second, we show that if this condition holds, then the standard assignment model predicts that the effciency and equality goals of migration policy are in conflict. Finally, we develop and calibrate a two-country extension of the assignment model with endogenous migration, and use it to quantify the implications of migration policy reforms.