Migration, trade, and foreign investment in Mexico, Vol. 1 of 1

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Migration, trade, and foreign investment in Mexico

Author:	Aroca Gonzalez, Patricio; Maloney, William F.;	Collection Title:	Policy research working paper ; no. WPS 3601
Country:	Mexico;	Date Stored:	2005/05/12
Document Date:	2005/05/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	Latin America & Caribbean
Report Number:	WPS3601	SubTopics:	Environmental Economics & Policies; Economic Theory & Research; Banks & Banking Reform; Health Monitoring & Evaluation; Municipal Financial Management
Volume No:	1 of 1

Summary: Part of the rationale for the North American Free Trade Agreement (NAFTA) 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 flows to the United States make direct measurement difficult, Aroca and Maloney instead evaluate the mechanism behind these predictions using data on migration within Mexico where the census data permit careful analysis. They offer the first specifications 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 the authors control for possible credit constraint effects. Greater exposure to FDI and trade deters out-migration with the effects working partly through the labor market. Finally, the authors generate some tentative inferences about the impact on increased FDI on Mexico-U.S. migration. On average, a doubling of FDI inflows leads to a 1.5-2 percent fall in migration.


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