The impact of return migration from the U.S. on employment and wages in Mexican cities

Dario Diodato, Ricardo Hausmann and Frank Neffke

No 2012, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: We study the effect of return migration from the U.S. to Mexico on the economies of Mexican cities. In principle, returnees increase the local labor supply and therefore put pressure on wages and employment rates of locals. However, having worked in the technologically more advanced US economy, they may also possess skills that complement the skills of local workers or even bring in new organizational and technological know-how that leads to productivity improvements in Mexico. Using an instrument based on involuntary return migration due to deportation by US authorities, we find evidence in support of both effects. Returnees affect wages of locals in different ways: whereas workers who share the returnees' occupations experience a fall in wages, workers in other occupations see their wages rise. However, the latter, positive, effect is easily overlooked, because it is highly localized: it only affects coworkers within the same city-industry cell. Moreover, both, positive and negative, wage effects are transitory and eventually disappear. In contrast, by raising the employment levels of the industry in which they find jobs, returnees permanently alter a city's industry composition.

Keywords: return migration; skills; employment; wages; Mexico; United States (search for similar items in EconPapers)
JEL-codes: F22 J21 J24 J61 (search for similar items in EconPapers)
Date: 2020-03, Revised 2020-03
New Economics Papers: this item is included in nep-lma, nep-ltv, nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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