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The International Transmission of Local Economic Shocks Through Migrant Networks

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  • María Esther Caballero
  • Brian Cadena
  • Brian K. Kovak

Abstract

Using newly validated data on geographic migration networks, we study how labor demand shocks in the United States propagate across the border with Mexico. We show that the large exogenous decline in US employment brought about by the Great Recession affected demographic and economic outcomes in Mexican communities that were highly connected to the most affected markets in the US. In the Mexican locations with strong initial ties to the hardest hit US migrant destinations, return migration increased, emigration decreased, and remittance receipt declined. These changes significantly increased local employment and hours worked, but wages were unaffected. Investment in durable goods and children's education also slowed in these communities. These findings document the effects in Mexico when potential migrants lose access to a strong US labor market, providing insight regarding the potential impacts of stricter US migration restrictions.

Suggested Citation

  • María Esther Caballero & Brian Cadena & Brian K. Kovak, 2021. "The International Transmission of Local Economic Shocks Through Migrant Networks," NBER Working Papers 28696, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28696
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    Cited by:

    1. Yu, Chan, 2023. "The role of immigrants in the United States labor market and Chinese import competition," Journal of International Economics, Elsevier, vol. 144(C).
    2. Barker, Nathan & Davis, C. Austin & López-Peña, Paula & Mitchell, Harrison & Mobarak, Ahmed Mushfiq & Naguib, Karim & Reimão, Maira Emy & Shenoy, Ashish & Vernot, Corey, 2023. "Migration and resilience during a global crisis," European Economic Review, Elsevier, vol. 158(C).
    3. Toman Barsbai & Vojtěch Bartoš & Victoria Licuanan & Andreas Steinmayr & Erwin Tiongson & Dean Yang, 2022. "Picture This: Social Distance and the Mistreatment of Migrant Workers," Working Papers 2022-17, Faculty of Economics and Statistics, Universität Innsbruck.
    4. Narcisse Cha'Ngom & Christoph Deuster & Frédéric Docquier & Joël Machado, 2023. "Selective Migration and Economic Development: A Generalized Approach," LISER Working Paper Series 2023-06, Luxembourg Institute of Socio-Economic Research (LISER).
    5. Carletto, Calogero & Maluccio, John A. & Shrestha, Savant Man & Stewart, Mackenzie F., 2021. "Migration, economic crisis and child growth in rural Guatemala: Insights from the Great Recession," Food Policy, Elsevier, vol. 104(C).
    6. Sofía Fernández Guerrico, 2023. "Trade Shocks, Population Growth, and Migration," ULB Institutional Repository 2013/357236, ULB -- Universite Libre de Bruxelles.
    7. Bocquier, Philippe & Cha’Ngom, Narcisse & Docquier, Frédéric & Machado, Joël, 2023. "The Within-Country Distribution of Brain Drain and Brain Gain Effects: A Case Study on Senegal," IZA Discussion Papers 16497, Institute of Labor Economics (IZA).
    8. Campos-Vazquez, Raymundo M. & Esquivel, Gerardo & Ghosh, Priyasmita & Medina-Cortina, Eduardo, 2023. "Long-lasting effects of a depressed labor market: Evidence from Mexico after the great recession," Labour Economics, Elsevier, vol. 81(C).

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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