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Title: How Large Are the Gains to Mexican Migrants and Those Who Stay Behind?

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: While it is widely acknowledged that the increase in incomes that migrants from Mexico, whether legal or illegal, receive upon migrating to United States are quite large, so far there has little systematic analysis of the actual size. Hence the present paper undertakes to estimate the magnitude of these gains. In so doing I identify three principal ways in which migration to US affects Mexican nationals’ wages. The first and the most obvious one is the difference between the wages that Mexican migrants receive when in US and the wages that they would have received had they not migrated. However, the out migration of workers from Mexico also results in shifts in relative labor supplies of different education and experience groups within Mexico. In order for the estimates of the first kind to be in accordance with economic theory, the relevant comparison of the gains for migrants to US is not between wages that they get in US vs. wages that currently prevail in Mexico, rather it is the wages they get in US as compared to counterfactual wages that would result were they to have stayed. Furthermore, the changes in relative labor supplies also affect the wages of those Mexican workers who remain in Mexico – this is the second channel through which migration affects wages. Depending on whether the out migrating workers are substitutes or complements to the workers who stay behind in the production process, this could result in either a loss or a gain to particular groups of workers who stay in Mexico. The third channel is the effect on wages of having migrated on those migrants who eventually return to Mexico (whether voluntarily or not). This paper documents that former migrants receive a sizeable wage premium upon their return, given their education and experience level. This can be taken as evidence for either the hypothesis that the migrants to US are selfselected groups who have intrinsically higher ability (in which case their wages would have been higher even had they not migrated to US) or that while in US they have acquired additional human capital and skills which, for whatever reasons, they could not have acquired had they staid (in which case their wages would have been comparable to the average in their education/experience group). The obvious type of “skill” here would of course be the learning of English, but others forms of “labor embodied technology transfer” are possible – for example Mexican workers in US could observe different, more efficient ways of organizing productive activity while in US, which they then apply upon their return. While the data at this point is not detailed enough to distinguish Electronic copy available at: http://ssrn.com/abstract=2182870 between the two hypothesis there is some suggestive evidence that both forces are at work.

Url: http://ssrn.com/abstract=2182870

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Authors: Szulga, Radek

Publisher: Carleton College

Data Collections: IPUMS USA

Topics: Migration and Immigration

Countries: Mexico, United States