A Pandemic Crossing the Border: The Impact of COVID-19 in the US on the Mexican Labor Market

Irvin Rojas and Jisang Yu

Economic Development and Cultural Change, 2024, vol. 73, issue 1, 195 - 219

Abstract: The US and Mexican labor markets are closely linked through migrant workers and remittances, and changes in remittance flow may alter labor allocations in the origin households. In this paper, we investigate how the prevalence of COVID-19 in the United States affected the local labor market in Mexico. We construct a Mexican municipality-level measure of exposure to COVID-19 in the United States using data on COVID-19 prevalence across the country and data on migrants’ destinations in various states. We find a positive effect of COVID-19 exposure in the United States on hours worked among workers in Mexico, yet no significant effects were found for local wages. We also find that the effect varies across subgroups, which indicates that the responses in hours worked depend on household dynamics, the nature of the occupation-specific tasks, and migration intensity. Finally, we document the potential mechanism behind the effect on hours worked, that is, through the changes in remittances sent to the origin municipalities in Mexico.

Date: 2024
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