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Tomatoes or Tomato Pickers? - Free Trade and Migration in the NAFTA Case
Abstract
This paper examines the relationship between trade liberalisation and migration in the case of Mexico. The increasing bilateral trade between Mexico and the United States after signing the North American Free Trade Agreement (NAFTA) was supposed to stem the illegal Mexican migration flow by contributing to economic growth and job creation in both countries. Twelve years after the treaty has come into effect questions emerge to what extent NAFTA was able to reduce the migration pressure: are trade and migration substitutes like the policy-makers had assumed or are they complements? Using monthly data from 1966 until 2004 we estimate a distributed lag model with the number of apprehensions at the US-Mexican border as a proxy for illegal migration. The results indicate that increasing trade flows cause larger illegal migration from Mexico to the United States.
... Stąd międzynarodowa wymiana handlowa -w świetle omawianej teorii -ma substytucyjny charakter w stosunku do międzynarodowej migracji siły roboczej. Analogicznie -jeśli przepływ czynników produkcji (w tym pracy) doprowadzi do wyrównania ich cen, nie będzie przesłanek do wymiany handlowej [Melchor del Río, Thorwarth 2007]. ...
... Usuwając założenie przyjęte przez Heckschera-Ohlina o jednakowych technologiach stosowanych przez dwa kraje, J.R. Markusen dowodzi, że handel i migracje międzynarodowe mogą mieć komplementarny charakter [Melchor del Río, Thorwarth 2007]. Markusen, przyjmując założenie o jednakowym wyposażeniu w czynniki wytwórcze dwóch krajów, za podstawę do wymiany handlowej uznaje zróżnicowaną technologię. ...
The aim of this paper is to explore how trade liberalization affects migration flows. This requires, first and foremost, a review of trade and migration theory indicating the relationship between trade and migration. The starting point is the theory of Heckscher – Ohlin - Samuelson, according to which trade and factor flows are substitutes. As will be shown, the removal of the assumptions made in this theory, however, leads to different conclusions: the flow of goods and labor are complementary at least in the short term. Similar conclusions arises from the review of existing empirical research and analysis of the evolution of migration from the Member States that joined the EU on 1 May 2004.
... Initially, most researchers try to explain this link using neoclassical trade theories which produces results of either substitutability or complementarity (see for example Lopez and Schiff, 1995;Del Rio and Thorwarth, 2007;Iranzo and Peri, 2009; among others). However, new wave of studies complemented this purely economics stance with other disciplines such as sociology, demography, and human geography (see for example Rauch and Trindade, 2002;Egger et al., 2012, among others). ...
This thesis explores the trade-migration-development nexus in the Philippines using pooled data consisting of thirty-three countries in six regions from 2000 to 2010. To further understand the econometric results, a case study was carried-out for Region IV-A, one of the regions with high frequency of migrants, and one which has high Gross Regional Domestic Product.
... only possible if Mexico grows relative to the US and if it retains farm support programs. Melchor del Rio and Thorwarth (2006) give support to Robinson et al. (1993) by showing, using monthly data from 1966 to 2004, that greater trade flows cause larger illegal migration from Mexico to the US. More recent works were interested in the relation between trade liberalization and emigration in Morocco. ...
Empirically, little is known about the effects of trade liberalisation on the skill composition of emigration flows in developing countries. The available computational literature has focused, for the most part, on United States-Mexico migration patterns after the creation of the North American Free Trade Agreement. More recent works have investigated the relation between trade liberalisation and emigration in Morocco, without looking to the impact of trade liberalisation on skilled and unskilled migration. This paper investigates the effects of trade liberalisation on the skill composition of migrant flows in Morocco. Because trade agreements involve substantial changes in prices, resource allocation and income, they also affect migration incentives, when migration is motivated by the wage differential between receiving and sending countries. Trade liberalisation will be problematic for an unskilled-labour abundant country like Morocco, if it gives incentives to skilled workers to move across borders. An appealing way of addressing this topic is to formulate a dynamic computable general equilibrium model that illustrates the transmission channels by which trade liberalisation affects local wages and migration incentives. The model is calibrated on the Moroccan Social Accounting Matrix of 2003. The results show that both the free trade agreement with the European Union and multilateral liberalisation reduce skilled and unskilled migration flows, still more pronounced in the multilateral case.
Questa tesi si propone di esaminare il rapporto tra l’integrazione commerciale derivante dagli accordi di libero scambio e i flussi migratori, concentrandosi in particolare sull’impatto della liberalizzazione del commercio determinata dall’entrata in vigore del North American Free Trade Agreement (NAFTA) nel 1994 sull’aumento dei flussi migratori tra Stati Uniti, Messico e Canada. Particolare attenzione viene data agli attraversamenti della frontiera meridionale tra Stati Uniti e Messico. Al fine di comprendere pienamente l’interazione tra questi due fenomeni, si esamineranno le variazioni relative agli scambi commerciali tra i tre paesi membri, prima e dopo l’implementazione del NAFTA, comprendendo come tali cambiamenti abbiano influenzato i movimenti migratori dal Messico verso gli Stati Uniti. Verranno inoltre esplorate le motivazioni che spingono gli individui ad attraversare la frontiera, nonché le sfide che tale attraversamento implica. Infine, saranno esplorate le caratteristiche della connessione "incerta" tra l’integrazione commerciale raggiunta mediante la firma del NAFTA e la migrazione dal Messico verso gli Stati Uniti. Si analizzeranno nel dettaglio gli effetti, nonché le conseguenze di tale integrazione sulle dimensioni, sulla composizione e sulle forme di migrazione tra Stati Uniti e Messico ripercorrendo la letteratura di rilievo in materia. Infine, si tenterà di comprendere, sulla base delle evidenze fornite dalla letteratura, se il NAFTA (USMCA) possa essere considerato come un deterrente per la migrazione Sud-Nord o come elemento propulsore di nuovi flussi migratori.
International migration involves the movement of people over national borders, while international trade deals with the production of goods or services in one country and their consumption in another. Economic theory assumes that migration and trade are substitutes, so that freer trade between countries with different wage levels should reduce voluntary migration as trade leads to convergence in wages. However, free-trade agreements can produce a migration hump as the pace of change accelerates and economies adjust, as migration increases before investment creates enough jobs to generate stay-at-home development despite remittances from migrants abroad. Efforts to deal with the root causes of migration must be aware of potential migration humps.
Studies routinely document that immigrant employment concentrates in non-traded goods sectors and that many immigrants have low inter-sectoral mobility. We consider these observed characteristics of immigrant employment with regard to the question of how immigration affects a nation's pattern of production and trade. We model an economy producing three goods; one is non-traded. Domestic labor and capital are domestically mobile but internationally immobile. Allowing that some new immigrants will become specific to the non-traded goods sector, the model indicates that the effects of immigration on output and trade depend importantly on the sectoral pattern of employment of both new and existing immigrants. Empirical investigation in a panel data set of OECD countries supports the model's prediction that immigration raises the output of non-traded goods. Consistent with the model, we also find that immigration and trade are complements. Given its empirical support, the model's implications for immigration policy are then discussed.
The principal objective of a free trade agreement between two or more countries is to increase efficiency. As the well-known Heckscher-Ohlin (1933) theorem suggests, by going from autarky to free trade, the countries involved will tend to specialize in the production of those goods and services that each country has a comparative advantage in, and this will lead to increased efficiency and welfare. This paper analyzes how the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico has created efficiency and welfare in Mexico, as it has been argued that NAFTA has been both advantageous as well as disadvantageous for Mexico. In sum, this paper investigates which particular sectors of Mexico’s economy benefitted from and were injured by NAFTA, while taking into account macroeconomic indicators such as GDP growth, Foreign Direct Investment (FDI) flows, volume of trade, wage inequalities and education, as most studies have found the net economic effects of NAFTA on Mexico to be ambiguous.
L'intérêt croissant des économistes dans la migration Sud-Nord a donné au Sud le statut de pays d'émigration et au Nord le statut de pays d'immigration. Toutefois, lorsque l'on observe de près les données, on trouve que la migration Sud-Sud est aussi importante que la migration Sud-Nord. L'ampleur des migrations Sud-Sud a fait de certains pays en développement, des pays d'origine, de transit et de destination. Quant à l'impact sur le marché du travail, deux effets contradictoires peuvent être observés: d'une part, l'immigration ainsi que les migrations entre régions à l'intérieur du pays augmentent la pression sur le marché du travail local et par la suite, l'incitation à émigrer. D'autre part, l'émigration peut servir soit à augmenter les salaires, soit à réduire le chômage dans les régions d'origine, ce qui permet, de renforcer la migration interne ainsi que l'immigration. Alors que la plupart des économistes ont particulièrement négligé cet aspect, cette thèse cherche, en premier lieu, à illustrer l'interdépendance entre ces différents flux migratoires. Elle conclut que l'impact de la migration sur le marché du travail dans le pays d'origine devrait être analysé avec précaution en tenant compte des entrées et des sorties de travailleurs. Cette thèse met également l'accent sur l'investissement des transferts dans le secteur immobilier et conclut que la canalisation des transferts vers les secteurs productifs n'a pas de retombées positives sur l'économie lorsque le secteur immobilier est très intégré dans cette dernière. Elle conclut aussi que l'économie marocaine a intérêt à poursuivre ses efforts de libéralisation commerciale en vue de réduire les flux migratoires
Actualmente tienen lugar pláticas oficiales entre los Estados Unidos y México acerca de la formación de una zona de libre comercio (ZLC) entre ambos países. La propuesta de una ZLC ha producido mucha especulación, así como algunos modelos económicos relativos al posible efecto en las economías de la América del Norte. El efecto de una ZLC Estados Unidos-México debe evaluarse en el contexto de la rica estructura de integración que se ha desarrollado históricamente entre los dos países. Durante más de un siglo México y los Estados Unidos han sido los dos países más interdependientes en los lados opuestos de la división entre Norte y Sur, incluyendo fuertes vínculos comerciales, de inversión y de migración. Si bien las economías de los dos países son claramente asimétricas (el producto interno bruto o PIB de México es aproximadamente 4% del estadunidense), el comportamiento económico en México produce efectos importantes en los Estados Unidos. Durante el auge petrolero y de la deuda de la década de los setenta, por ejemplo, tanto el volumen del comercio entre los Estados Unidos y México como el superávit comercial de aquel país con el nuestro aumentaron de manera considerable. Después de la crisis de la deuda de 1982, el derrumbe de las exportaciones estadunidenses a la América Latina y la necesidad que tenían los principales países de la región de generar superávit comerciales para pagar el servicio de su cuantiosa deuda, fueron factores importantes en el aumento del déficit comercial estadunidense a mediados de la década de los ochenta. México y los Estados Unidos se enfrentan también a una interdependencia cada vez mayor en el mercado del trabajo. Las tendencias demográficas indican una fuerza de trabajo estadunidense que envejece y se reduce, en tanto existe una fuerza de trabajo mexicana que crece rápidamente durante el fin del siglo. Estas tendencias producirán complementariedades potenciales en el mercado del trabajo así como graves problemas de ajuste durante los próximos veinte años.
Several models are presented in which factor mobility leads to an increase in the volume of world trade. The models share the common characteristic that the basis for trade is something other than differences in relative factor endowments. These alternative bases for trade include returns to scale, imperfect competition, production and factor taxes, and differences in production technology. Taken together, the models suggest a more general idea: the widely held notion that trade in goods and factors are substitutes is in fact a rather special result which is a general characteristic only of factor proportions models.
This paper examines the effect of immigration on the US trade flows. The model hypothesizes that immigration facilitates international trade with home countries by lowering transaction costs. Immigrants also demand products from their country of origin and thus stimulate trade. Using a panel data set we estimate a dynamic semiparametric fixed-effect model. The immigrant stock, a proxy for transaction costs, enters the model non-parametrically, whereas other variables enter the model log-linearly, as implied by the gravity model of international trade. To estimate this semiparametric model, we develop a new instrumental variable estimator with desirable asymptotic properties. The results indicate that the immigration effect on imports is positive for both finished and intermediate goods, but the effect on exports is positive only for finished goods. The findings supports the hypothesis that for finished goods where country specific information is crucial for trading, immigrants have a pro trade effect for both US imports and US exports. This pro trade effect of the information and knowledge carried by the immigrants is not observed for the US exports in the intermediate goods. Immigrants also have a strong demand effect both for the consumer and intermediate imports.
Immigration and Trade: Evidence from the United Kingdom. — This paper investigates the link between immigration and trade
using recent UK data. Immigration from non-Commonwealth countries is shown to have a significant export-enhancing effect.
By contrast, immigration from Commonwealth countries is found to have no substantial impact on exports. We conjecture that
this could be because immigrants from the UK’s former colonies do not bring with them any new information that can help substantially
reduce the transaction cost of trade between their home countries and the host nation. The study also reveals a pro-imports
effect of immigration from the non-Commonwealth countries, whereas immigration from the Commonwealth appears to be reducing
imports, perhaps reflecting trade-substituting activities by immigrants.
In the standard Heckscher-Ohlin model, trade and migration are substitutes (that is, migration decreases with trade liberalization). The authors add four factors to the standard Heckscher-Ohlin model: labor skill levels (skilled or unskilled), international labor mobility, migration costs, and financing constraints. They examine two types of simulation. Case one applies to countries in the post-demographic transition stage, with a stable population. This includes countries of Eastern Europe and the former Soviet Union. Case two applies to countries with rapidly growing populations, such as Egypt, El Salvador, Mexico, and Morocco. In case one, trade liberalization raises emigration of the unskilled (and has no effect on emigration of the skilled), while greater protection raises emigration of the skilled (and has no effect on emigration of the unskilled). That is, any change in trade policy raises total emigration, but trade liberalization improves the average skill level of the labor force and increased protection lowers it. In case two, trade liberalization raises emigration of the unskilled and reduces emigration of the skilled. That is, the average skill level rises and thenet effect on total emigration is ambiguous. The opposite occurs with increased protection. In both cases, the average skill level of the population falls when protection increases in the presence of international migration, high migration costs, and financing constraints. Under the same circumstances, the skill level rises under trade liberalization.
Part of the rationale for the North American Free Trade Agreement was that it would increase trade and foreign direct investment ( fdi ) flows, creating jobs and reducing migration to the United States. Since poor data on illegal migration to the United States make direct measurement difficult, data on migration within Mexico, where census data permit careful analysis, are used instead to evaluate the mechanism behind predictions on migration to the United States. Specifications are provided 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 possible credit constraint effects are controlled for. Greater exposure to fdi and trade deters outmigration, with the effects working partly through the labor market. Finally, some tentative inferences are presented about the impact of increased fdi on Mexico--U.S. migration. On average, a doubling of fdi inflows leads to a 1.5--2 percent drop in migration. Copyright 2005, Oxford University Press.
If migrants return to their origin countries, two questions arise which are of immediate economic interest for both immigration and emigration country: What determines their optimal migration duration, and what are the activities migrants choose after a return. Little research has been devoted to these two issues. This paper utilises a unique survey data set which records activities of returned migrants. We first illustrate the activities of immigrants after returning. We show that more than half of the returning migrants are economically active after return, and most of them engage in entrepreneurial activities. We then develop a model, where migrants decide simultaneously about the optimal migration duration, and their after-return activities. Guided by this model, we specify and estimate an empirical model, where the after-return activity, and the optimal migration duration are simultaneously chosen.
By means of a descriptive survey of theoretical literature the paper first works out the potential determinants that may drive international migration from developing to developed countries. Furthermore, we look on the relationship between trade, development and migration. Empirical studies focusing on international migration from LDCs so far are very scarce. The paper utilizes a new dataset that is based on migration from 86 African and Asian countries to Germany. Information is available on overall moves (1981-1995) and asylum migration (1984-1995). The estimation results confirm the importance of the economic differential between countries for migration, the existence of an inverse u-shaped relationship between development and migration, as well as the importance of the political situation in sending countries and of network effects.
A model is constructed in which multinational firms may arise endogenously. Multinationals exist in equilibrium when transport and tariff costs are high, incomes are high, and firm-level scale economies are important relative to plant-level scale economies. Less obvious, multinationals are more important in total economic activity when countries are more similar in incomes, relative factor endowments, and technologies. The model may thus be useful in explaining several stylized facts, including (a) the growing importance of direct investment relative to trade among the developed countries over time and (b) the greater ratio of investment to trade among the developed countries relative to this ratio for 'north-south' or 'south-south' economic relationships. The model offers predictions about the volume of trade that contrast with those of the 'new trade theory', predicting that trade at first rises and then falls as countries converge in incomes, relative endowments, and technologies. Welfare is also considered, and it is shown that direct investment makes the smaller (or high cost) country better off, but may make the larger (or low cost) country worse off.
In the short-to-medium run, a North American Free Trade Agreement (NAFTA) is likely to increase pressures for undocumented migration from Mexico to the United States. But given that NAFTA (if approved) will be phased-in over a 15-year period, the migration effect need not be sudden or overwhelming. In the long run, however, if free trade brings about an improvement in the Mexican economy relative to the US economy, the incentives for undocumented migration are likely to weaken. The authors calculate estimates of the undocumented gross annual migration flow by stipulating various degrees of changes in the relative level of unemployment and of wage rates between the United States and Mexico. These estimates show that narrowing the wide economic differentials between the two countries could substantially reduce the undocumented flow.
Whether trade and factor movements are substitutes or complements is a well re-searched topic on a theoretical level. Traditional trade theory suggests that both are substitutes. Modern trade theory and extensions of traditional models conclude that there is a complementary relationship. This paper studies trade and labour migration between Germany and its main source countries for foreign workforce, namely Spain, Portugal, Greece, Italy, and Turkey. The results indicate that there is a substitutional link between trade and foreign labour force. There is no significant impact of labor migration on trade but an increasing trade volume has significantly negative effects on labour migration.
At the end of the 20th century nearly all developed nations have become countries of immigration, absorbing growing numbers of immigrants not only from developed regions, byt increasingly from developing nations of the Third World. Although international migration has come to play a central role in the social, economic, and demographic dynamics of both immigrant-sending and immigrant-receiving countries, social scientist have been slow to construct a comprehensive theory to explain it. Efforts at theoretical explanation have been fragmented by disciplinary, geographic, and methodological boudaries. Worlds in Motion seeks to overcome these schisms to create a comprehensive theory of international migration for the next century. After explicating the various propositions and hypotheses of current theories, and identifying area of complementarity and conflict, the authors review empirical research emanting from each of the world's principal international migration systems: North America, Western Europe, the Gulf, Asia and the Pacific, and the Southern Cone of South America. Using data from the 1980s, levels and patterns of migration within each system are described to define their structure and organization. Specific studies are then comprehensively surveyed to evaluate the fundamental propositions of neoclassical economics, the new economics of labour migration, segmented labour market theory, world systems theory, social capital theory, and the theory of cumulative causation. The various theories are also tested by applying them to the relationship between international migration and economic development. Although certain theories seem to function more effectively in certain systems, all contain elements of truth supported by empirical research. The task of the theorist is thus to identify which theories are most effective in accounting for international migration in the world today, and what regional and national circumstances lead to a predominance of one theoretical mechanism over another. The book concludes by offering an empirically-grounded theoretical synthesis to serve as a guide for researchers and policy-makers in the 21st century.
International migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate, which can increase inequality in the sending community. However, the migration networks formed lower the costs for future migrants, which can in turn lower inequality. This paper shows both theoretically and empirically that wealth has a nonlinear effect on migration, and then examines the empirical evidence for an inverse U-shaped relationship between emigration and inequality in rural sending communities in Mexico. After instrumenting, we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration. We also find some suggestive evidence for an inverse U-shaped relationship among communities with a wider range of migration experiences.
In this paper, we examine the increase in relative wages for skilled workers in Mexico during the 1980s. Rising wage inequality in Mexico is linked to foreign capital inflows. We study the impact of foreign direct investment (FDI) on the skilled labor share of wages in Mexico over 1975–1988. We measure FDI using regional data on foreign assembly plants. Growth in FDI is positively correlated with the relative demand for skilled labor. In regions where FDI has concentrated, growth in FDI can account for over 50 percent of the increase in the skilled labor wage share that occurred in the late 1980s. © 1997 Elsevier Science B.V.
The world economy nowadays experiences an unprecedented openness. The fading
of borders between independent economic systems - local, state, national and supernational
- allows capital, firms, and labor to move more freely around the globe, so as to better
exploit differences in opportunities (employment, savings, investments, etc.) arising from
ever-changing technological and economic environments, as well as in fiscal and monetary
stances.
Globalization is not an entirely new phenomenon. The world economy experienced
such a process about a century ago, until it was disrupted by the eruption of the first and
second world wars. Nevertheless, the current trend of economic integration is historically
unprecedented. We support Bordo, Eichengreen and Irwin (1999) who conclude that “our
world is different: Commercial and financial integration before World War I was more
limited.” A century ago, trade in goods was impeded by transport costs and imperfect
information. Also, services that were then considered largely nontradable, are now a growing
component of the volume of trade. Intra-industry trade, especially among multinationals,
is flourishing. Financial integration is deeper and broader than before, as financial flows
spread into more and more activities and sectors.
This is the new and totally revised edition of Ltkepohl's classic 1991 work. It provides a detailed introduction to the main steps of analyzing multiple time series, model specification, estimation, model checking, and for using the models for economic analysis and forecasting. The book now includes new chapters on cointegration analysis, structural vector autoregressions, cointegrated VARMA processes and multivariate ARCH models. Different procedures for model selection and model specification are treated and a wide range of tests and criteria for model checking are introduced. Causality analysis, impulse response analysis and innovation accounting are presented as tools for structural analysis. It bridges the gap to the difficult technical literature on the topic as it is a highly accessible and user-friendly work. In addition, multiple time series courses in other fields such as statistics and engineering may be based on it.
This paper analyzes the determinants of immigration flows to Germany in a time series-cross section framework. The reduced form of a well established theoretical model is estimated for a sample of 17 sending countries and a period covering 1960 to 1994. The estimates are then used to perform out-of-sample forecasts to assess the immigration potential from the Eastern European accession candidates to Germany. These scenarios predict a moderate increase in immigration to Germany, especially for the first round accession candidates.
Immigrant employment often concentrates in non-traded goods sectors and many immigrants have low inter-sectoral mobility. We consider these observed characteristics of immigrant employment for the question of how immigration affects a nations pattern of production and trade. We model an economy producing three goods; one is non-traded. Domestic labor and capital are domestically mobile but internationally immobile. Some immigrant labor is specific to the non-traded sector. Our model indicates that the output and trade effects of immigration depend importantly on the sector and nature of immigrant employment. Empirical investigation of the models predictions indicates that trade and immigration are complements.
"This article provides background information on NAFTA [the North American Free Trade Agreement], reviews data on its economic effects, and summarizes studies and projections of NAFTA's likely effects on Mexico-to-U.S. migration. Migration factors (demand-pull, supply-push, and networks) are examined to determine whether NAFTA's effect on economic development particularly in the border areas will accelerate or retard migration. The conclusion is that NAFTA is likely to produce a temporary migration hump, slightly raising already high migration levels in the 1990s, but reducing the volume of Mexico-to-U.S. migration that would otherwise occur over subsequent decades."
"Will a North American Free Trade Agreement (NAFTA) decrease Mexican migration to the United States, as the U.S. and Mexican governments assert, or increase migration beyond the movement that would otherwise occur, as NAFTA critics allege? This article argues that it is easy to overestimate the additional emigration from rural Mexico owing to NAFTA-related economic restructuring in Mexico. The available evidence suggests four major reasons why Mexican emigration may not increase massively, despite extensive restructuring and displacement from traditional agriculture....NAFTA-related economic displacement in Mexico may yield an initial wave of migration to test the U.S. labor market, but this migration should soon diminish if the jobs that these migrants seek shift to Mexico."
"Some controversy has surrounded the extent to which employment in maquiladoras (assembly plants located along the Mexican border) has stimulated undocumented immigration to the United States. This study uses monthly data of maquiladora employment and INS [Immigration and Naturalization Service] apprehensions in a 'push-pull' migration framework to study the association between these two variables during the April 1978 to January 1982 period. The findings suggest that there is a significantly negative relationship between the one month lag of maquiladora employment and INS apprehensions. Employment growth in the maquiladora sector tends to be followed by a reduction of apprehensions one month later. The study also finds that male and female apprehensions appear to respond to relatively similar economic factors."
"This article examines how data on INS [Immigration and Naturalization Service] border apprehensions are related to the flow of undocumented migrants crossing the southern U.S. border. Its centerpiece is a demographic model of the process of unauthorized migration across the Mexico-U.S. frontier. This model is both a conceptual framework that allows us to see theoretical linkages between apprehensions and illegal migrant flows, and a methodological device that yields estimates of the gross number of undocumented migrants. One implication of the model is that, for the first time, the relation between apprehensions and illegal flows can be examined empirically. We show that the ratio in each period between apprehensions and the undocumented flow is simply the odds of being located and arrested on any given attempt to enter the United States clandestinely."
This paper examines how dollarization affects wages and employment in the Mexican labor market. Dollarization is modeled as a fixed real exchange rate and also as a potentially increased inflow of capital from abroad. The effects of dollarization depend upon whether adopting a fixed exchange reduces the rate of return on emigration and helps to attract foreign capital. The paper investigates how Mexican emigration to the United States responds to changes in bilateral economic conditions. The evidence indicates that the flow of illegal immigrants from Mexico into the United States is sensitive to economic conditions and is more volatile when the Mexican monetary authorities have fixed the exchange rate in the past. In contrast, the legal immigrant flow is not sensitive to changes in relative economic conditions.
In this paper, I selectively review recent literature on illegal migration from Mexico to the United States. I begin by discussing methods for estimating stocks and flows of illegal migrants. While there is uncertainty about the size of the unauthorized population, new data sources make it possible to examine the composition of legal and illegal populations and the time-series covariates of illegal labor flows. I then consider the supply of and demand for illegal migrants. Wage differentials between the United States and Mexico are hardly a new phenomenon, yet illegal migration from Mexico did not reach high levels until recently. An increase in the relative size of Mexico’s working-age population, greater volatility in U.S.–Mexico relative wages, and changes in U.S. immigration policies are all candidate explanations for increasing labor flows from Mexico. Finally, I consider policies that regulate the cross-border flow of illegal migrants. While U.S. laws mandate that authorities prevent illegal entry and punish firms that hire unauthorized immigrants, these laws are imperfectly enforced. Lax enforcement may reflect political pressure by employers and other interests that favor open borders.
We examine illegal immigration in the United States from Mexico over the period 1976-1995. One challenge is that we do not observe the number of individuals that attempt to enter the United States illegally; we only observe the number of individuals apprehended attempting to cross the U.S.-Mexico border illegally. Based on a simple migration model, we postulate the existence of an apprehensions function, which expresses apprehensions at the border as a function of illegal attempts to cross the border and U.S. border-enforcement effort. We estimate a reduced-form apprehensions function using monthly data on apprehensions at the U.S.-Mexico border, person hours the U.S. Border Patrol spends policing the border, and wages in the United States and Mexico. We find that a 10% decrease in the Mexican real wage leads to a 7.5% to 8.8% increase in apprehensions at the border. Under plausible conditions this is a lower bound for the effect of the Mexican wage on attempted illegal immigration. It is the purchasing power of U.S. wages in Mexico, not the purchasing power of U.S. wages in the United States, that matters for border apprehensions, suggesting that migrants expect to maintain ties with Mexico. Border apprehensions are higher in the month following a large devaluation of the peso and higher when the change in the Mexican real wage is negative. Each additional hour the U.S. Border Patrol spends policing the border yields an additional 0.25 to 0.33 apprehensions.
The unit root hypothesis is examined allowing a possible one-time change in the level or in the slope of the trend function. When fluctuations are stationary around a breaking trend function, standard tests cannot reject the unit root, even asymptotically. Consistent tests are derived and applied to the Nelson-Plosser data set (allowing a change in level for the 1929 crash) and to the postwar quarterly real GNP series (allowing a change in slope after 1973). The unit root hypothesis is rejected at a high confidence level for most series. Fluctuations are stationary. The only persistent "shocks" are the 1929 crash and the 1973 oil price shock. Copyright 1989 by The Econometric Society.
Perron (1989) has carried out tests of the unit root hypothesis against the alternative hypothesis of trend stationarity with a break in the trend occurring at the Great Crash of 1929 or at the 1973 oil price shock. Here a variation of Perron's test is considered in which the break point is estimated rather than fixed. The asymptotic distribution of the "estimated break point" test statistic is determined and the data considered by Perron are reanalyzed. The authors find less evidence against the unit root hypothesis than Perron finds for many of the data series, but stronger evidence against it for several of the series.
Recent work by Said and Dickey (1984 ,1985) , Phillips (1987), and Phillips and Perron(1988) examines tests for unit roots in the autoregressive part of mixed autoregressive-integrated-moving average (ARIHA) models (tests for stationarity). Monte Carlo experiments show that these unit root tests have different finite sample distributions than the unit root tests developed by Fuller(1976) and Dickey and Fuller (1979, l981) for autoregressive processes. In particular, the tests developed by Philllps (1987) and Phillips and Perron (1988) seem more sensitive to model misspeciflcation than the high order autoregressive approximation suggested by Said and Diekey(1984).
The continuous flow of workers from Mexico to the US has given rise to a wide range of proposals aimed at containing the migratory tide. At the top of the list is usually Mexican border industrialization, the incarnation of the view that immigration should be controlled at the border, through the creation of an economic fence absorbing the potential migrants. Though the BIP is only part of a wider border industrialization process, it has been particularly connected to US immigration policy. Indeed, the BIP was established in the aftermath of the bracero program and its main purpose was to absorb the former braceros into the Mexican labour force so as to present their illegal migration to the US. I examine the impact of the BIP on immigration to the US.-from Author
The history of the development of statistical hypothesis testing in time series analysis is reviewed briefly and it is pointed out that the hypothesis testing procedure is not adequately defined as the procedure for statistical model identification. The classical maximum likelihood estimation procedure is reviewed and a new estimate minimum information theoretical criterion (AIC) estimate (MAICE) which is designed for the purpose of statistical identification is introduced. When there are several competing models the MAICE is defined by the model and the maximum likelihood estimates of the parameters which give the minimum of AIC defined by AIC = (-2)log-(maximum likelihood) + 2(number of independently adjusted parameters within the model). MAICE provides a versatile procedure for statistical model identification which is free from the ambiguities inherent in the application of conventional hypothesis testing procedure. The practical utility of MAICE in time series analysis is demonstrated with some numerical examples.
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