Working Paper: NBER ID: w28696
Authors: Mara Esther Caballero; Brian Cadena; Brian K. Kovak
Abstract: Using newly validated data on geographic migration networks, we study how labor demand shocks in the United States propagate across the border with Mexico. We show that the large exogenous decline in US employment brought about by the Great Recession affected demographic and economic outcomes in Mexican communities that were highly connected to the most affected markets in the US. In the Mexican locations with strong initial ties to the hardest hit US migrant destinations, return migration increased, emigration decreased, and remittance receipt declined. These changes significantly increased local employment and hours worked, but wages were unaffected. Investment in durable goods and children's education also slowed in these communities. These findings document the effects in Mexico when potential migrants lose access to a strong US labor market, providing insight regarding the potential impacts of stricter US migration restrictions.
Keywords: No keywords provided
JEL Codes: F22; J21; J23; J61; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. labor demand shocks (J23) | demographic and economic outcomes in Mexican communities (J11) |
| declining U.S. labor demand (J23) | return migration increases (F22) |
| declining U.S. labor demand (J23) | emigration decreases (J11) |
| declining U.S. labor demand (J23) | remittance receipt declines (F24) |
| loss of U.S. remittance income (F24) | additional household members enter labor force (J49) |
| declining U.S. labor demand (J23) | local employment increases (J68) |
| declining U.S. labor demand (J23) | hours worked increases (J29) |
| declining U.S. labor demand (J23) | investment in durable goods slows (E20) |
| declining U.S. labor demand (F66) | children's education investment slows (I21) |
| larger U.S. job losses (F66) | slower growth in durable goods ownership (L68) |
| larger U.S. job losses (F66) | decline in school enrollment (I21) |