Migration, Development and US Labor Markets: The Mexican-US Case

Abstract

This paper explores economic and technological changes and the evolution of labor markets in sending and receiving countries, with an emphasis on developments in a major emigration country, Mexico, and the impacts of migrants from Mexico and Latin America on the labor markets of Canada and the US. There are four major conclusions. Firstly, while immigrant workers are important in many industries, occupations, and areas, no major US industry or occupation is dependent on foreign-born or Mexican-born workers. Secondly, Mexican-born workers tend to be near the low end, often filling jobs that would be eliminated or modified by technology if wages rose. Thirdly, the short- and long-run effects of trade and investment on migration may be very different, producing a migration hump in the short-term that may increase migration flows before they decline. Finally, current demographic changes in Mexico's labor market can lead to a near-term decline in the volume of unauthorized migration to the United States even if emigration probabilities continue to rise moderately. Mexico, the US, and Canada are on the path toward closer economic integration that could soon reduce permanent or settler migration, even as temporary or sojourner migration increases for business and other purposes. The reduction in emigration pressure in Mexico may be noticeable sooner than is commonly realized for demographic and economic reasons. The policy challenge is to do no harm, to avoid policies that produce unintended negative consequences or that prolong Mexican-US unauthorized migration during the transition.