The Determinants and the Selection of Mexico-US Migrants Daniel Chiquiar Banco de México May 30th, 2011 6th IZA/World Bank Conference 1 Index 1. Introduction 2. Self-selection of Mexico-US migrants 3. Trend in self-selection patterns 4. Possible hypothesis 5. Concluding remarks 2 Introduction The question of who migrates from Mexico to the US has been the subject of several recent research papers. There has been mixed evidence on the self-selection of Mexican immigrants in the US. The topic is relevant given that effective public policies related to migration between Mexico and the US depend on the characteristics of migrants. • In particular, the skill level of Mexican migrants to the United States is a relevant issue for labor markets and immigration policy. Introduction 3 Borjas’ Self Selection Model Constant migration costs. Wage (net of migration costs) Mexico USA Migrants s* Introduction Schooling In poor countries (high returns to skill, high wage dispersion), the low-skilled have the strongest incentive to migrate: negative selection. Under the assumption that wages are higher in the US than in Mexico at low education levels, and the opposite at high education levels, we should expect negative selection of migrants. 4 Heterogeneity in migration costs Wage (net of migration costs) Mexico USA Migrants sL Introduction sU If migration costs are decreasing in schooling, we could observe intermediate selection. Migration costs preclude those with low schooling from migrating, and high returns to schooling in Mexico dissuade those with high schooling from migrating. Schooling 5 Index 1. Introduction 2. Self-selection of Mexico-US migrants 3. Trend in self-selection patterns 4. Possible hypothesis 5. Concluding remarks 6 Self-selection of Mexico-US migrants Selectivity Pattern of Mexican Migrants to the US Main findings Selection on Education Selection on Wages Data Chiquiar and Hanson (2005) intermediate intermediate US and Mexican Censuses (1990 and 2000) Kaestner and Malamud (2010) intermediate intermediate MxFLS1/ Orrenius and Zavodny (2005) intermediate MMP2/ McKenzie and Rapoport (2010) positive in regions with low migration experience negative in regions with high migration experience ENADID3/ Fernández-Huertas Moraga (2011) negative Ibarraran and Lubotsky (2007) negative Ambrosini and Peri (2011) negative 1/ Mexican Family Life Survey 2/ Mexican Self-selection of Mexico-US migrants Migration Project 3/ Encuesta Nacional de la Dinámica Demográfica negative ENET 4/ Mexican Census (2000) negative 4/ Encuesta MxFLS1/ Nacional de Empleo Trimestral 7 Chiquiar & Hanson (2005) Main finding is not consistent with a simple Borjas model: intermediate selection of male immigrants in the US. positive selection of female immigrants in the US. Mexican immigrants are more educated than non-migrants. Migrants would fall in the middle and upper portions of Mexico’s wage distribution. • Estimation of counterfactual wage distribution in Mexico. Data used: 1990 and 2000 Mexican and U.S. population censuses. • Main concerns: Undercount of illegal immigrants. May overstate education due to additional schooling in the U.S. Findings in terms of observable characteristics only. Self-selection of Mexico-US migrants 8 Kaestner & Malamud (2010) Find intermediate selection of male Mexican migrants with respect to a skill index based on observed characteristics. Little evidence of selection on unobservables. No selection once proxy variables for costs of migration are taken into account. Data used: Mexican Family Life Survey (MxFLS). • • • • • Panel data 2002 & 2005 Can observe earnings (and other characteristics) prior to migration. Can identify migrants who moved their entire household. Possible Ashenfelter dip. Small sample size. Evidence that skills and costs of migrating are highly negatively correlated. Self-selection of Mexico-US migrants 9 Orrenius & Zavodny (2005) Find intermediate selection of illegal immigrants from Mexico with respect to the education distribution. • Stricter border enforcement is associated with a more positively selected immigrant stream (higher average education). • Higher U.S. wages and improved conditions in Mexico have the opposite effect (lower average education of undocumented immigrants). Data used: Mexican Migration Project (MMP), 1982-1983, 1987-1997. • Data concerns: Only migrants who have either returned to Mexico or who have at least one household member remaining in Mexico. Recall bias (data collected retrospectively). Limited number of communities. Self-selection of Mexico-US migrants 10 McKenzie & Rapoport (2010) Main Result: self-selection depends on migration history of the community. • Positive or neutral selection in communities with weak migration networks. • Negative selection in communities with stronger networks. Data used: Encuesta Nacional de la Dinámica Demográfica (ENADID), 1997. • Data concerns: Only migrants who have either returned to Mexico or who have at least one household member remaining in Mexico. Hard to control for unobservable characteristics. Self-selection of Mexico-US migrants 11 Fernández-Huertas Moraga (2011) Finds negative selection on wages and intermediate to negative selection on education. • For women, migrants are more educated than non-migrants. • Selection is positive in rural Mexico. Data used: Encuesta Nacional de Empleo Trimestral (ENET), 2002-2004. • Panel data. Earnings (and other characteristics) prior to migration. Possible Ashenfelter dip. • Only migrants who have either returned to Mexico or who have at least one household member remaining in Mexico. • Low rates of labor market participation and lack of information on wages due to the inclusion of younger men (aged 16 to 20). Self-selection of Mexico-US migrants 12 Ibarraran & Lubotsky (2007) Find negative selection in terms of education. • They estimate the education of Mexican migrants based on information given by household members who remained in Mexico. • Then conclude that migrants tend to be less educated than non-migrants. Data used: Mexican Census 2000. • Had to make several assumptions to predict education attainment of migrants. Self-selection of Mexico-US migrants 13 Ambrosini & Peri (2011) Use the Mexican Family Life Survey (MxFLS), 2002-2005. Evidence of negative selection. • On average, workers who later migrated earned 23% less than workers who did not migrate. • Note that this is a point estimate, not an analysis of the wage distribution. Difference in (log) wages between migrants and non-migrants before migration Selection Total Difference Explained by Observable Due to Unobservable Total Male Female -23% -40% 10% (3.9%) (5.0%) (4.0%) -5% -12% -5% (4.0%) (5.2%) (4.3%) -18% -27% 15% (3.8%) (4.7%) (3.7%) Source: Ambrosini & Peri (2011), Table 2. Self-selection of Mexico-US migrants 14 Ambrosini & Peri (2011) Evidence on costs of migration, once controlling for the migration earnings premium: • Higher costs of migrating for highly educated. • Living in a state close to the US border or having some assets and lower debt make migration more likely. • Having a relative in the US also makes migration more likely. • Negative shocks to the household increase the probability of migrating. Self-selection of Mexico-US migrants 15 Ambrosini & Peri (2011) Determinants of Migration Probabilities Dependent Variable: percentage of migrants in the skill cell Specifications Migration Premium (1) (2) (3) (4) (5) 0.018*** 0.014** 0.014*** 0.006** 0.009** (0.001) (0.001) (0.001) (0.002) (0.002) -0.006 -0.006 (0.003) (0.004) Living in Border States 0.07** Living in Mexico City -0.06** Having a Relative in US 0.05** (0.01) (0.02) (0.007) Pre-migration income 0.002** Pre-migration log of assets (0.0001) -0.002* Pre-migration log of debt (0.0001) -0.02** Pre-migration log of house value (0.001) 0.038* Share of individuals who experienced a family shock in the last year (0.008) -0.0006 Share of entrepreneurs Age, education and family Status Dummies Border and family network controls Initial wealth controls Number of cells Observations (0.0006) No No No Yes No No Yes Yes No Yes Yes Yes Yes Yes Yes 72 4,246 72 4,246 72 4,246 72 4,246 72 4,246 ***, **, * denote significance at the 1%, 5% and 10% level respectively. Source: Ambrosini, JW. and Peri, G. (2011). The Determinants and the Selection of Mexico-US Migrants. Tables 6, 7, 8, and 9. Self-selection of Mexico-US migrants 16 To keep in mind When comparing results across different studies some points should be kept in mind: • Flows vs stocks: some papers study selection of migration flows while others focus on stocks of migrants. • Recent vs not so recent migrants: if self-selection changes over time, results may vary depending on when Mexican migrants arrived to the US. Costs of migration are still hard to identify with precision. Self-selection in return migration needs more attention. Self-selection of Mexico-US migrants 17 Index 1. Introduction 2. Self-selection of Mexico-US migrants 3. Trend in self-selection patterns 4. Possible hypothesis 5. Concluding remarks 18 Trend in self-selection patterns The research previously described looks at self-selection at one point in time. However, given possible changes of the self-selection patterns over time, it is important to look at long term trends. Chiquiar and Hanson (2005) had already identified a shift towards less positive selection between 1990 and 2000. Very recent data from the 2010 Mexican Census data allows us to confirm this trend. Trend in self-selection patterns 19 Trend in self-selection patterns We find that education levels have increased for both Mexican residents and Mexican immigrants in the US, from 1990 to 2000, and to 2010. However, Mexican immigrants have become less educated relative to Mexican residents. This pattern is confirmed when we compute counterfactual wage distributions. Trend in self-selection patterns 20 Cumulative distribution of highest grade of schooling completed Male Female 1.0 1.0 Mexican Residents 0.8 Cumulative distribution Cumulative distribution Mexican Residents 0.6 0.4 0.2 1990 2000 0-4 0-8 0-9 0-11 0-12 0-15 Highest grade of schooling completed 0.2 0-16+ 1990 0 1.0 Recent Mexican Immigrants Cumulative distribution Cumulative distribution 0.4 2000 2010 0.0 0 0.8 0.6 2010 0.0 1.0 0.8 0.6 0.4 0.2 1990 2000 0.8 0-4 0-8 0-9 0-11 0-12 0-15 Highest grade of schooling completed 0-16+ Recent Mexican Immigrants 0.6 0.4 0.2 2010 1990 2000 2010 0.0 0.0 0 0-4 0-8 0-9 0-11 0-12 0-15 Highest grade of schooling completed 0-16+ 0 0-4 0-8 0-9 0-11 0-12 0-15 Highest grade of schooling completed 0-16+ Source: Mexican Census (1990, 2000, and 2010), US Census (1990 and 2000) and ACS (2009). Trend in self-selection patterns 21 Self-selection on Education Cumulative distribution of highest grade of schooling completed Men 1.0 1990 1.0 2000 0.9 0.9 0.8 0.8 0.8 0.7 0.7 0.7 0.6 0.5 0.4 0.3 Mexican Residents 0.2 Cumulative distribution 0.9 Cumulative distribution Cumulative distribution 1.0 0.6 0.5 0.4 0.3 Mexican Residents 0.6 0.5 0.4 0.3 Recent Mexican Immigrants Recent Mexican Immigrants 0.1 0.1 0.1 0.0 0.0 0.0 0 0-4 0-8 0-9 0-11 0-12 0-15 0-16+ Highest grade of schooling completed Mexican Residents 0.2 0.2 Recent Mexican Immigrants 2010 0 0-4 0-8 0-9 0-11 0-12 0-15 0-16+ Highest grade of schooling completed 0 0-4 0-8 0-9 0-11 0-12 0-15 0-16+ Highest grade of schooling completed Source: Mexican Census (1990, 2000, and 2010), US Census (1990 and 2000) and ACS (2009). Trend in self-selection patterns 22 Self-selection on Education Cumulative distribution of highest grade of schooling completed Women 1.0 1990 1.0 2000 0.9 0.9 0.8 0.8 0.8 0.7 0.7 0.7 0.6 0.5 0.4 0.3 Mexican Residents Cumulative distribution 0.9 Cumulative distribution Cumulative distribution 1.0 0.6 0.5 0.4 0.3 0.5 0.4 0.3 Recent Mexican Immigrants 0.1 0.1 0.1 0.0 0.0 0.0 0 0-4 0-8 0-9 0-11 0-12 0-15 0-16+ Highest grade of schooling completed Mexican Residents 0.2 Recent Mexican Immigrants Recent Mexican Immigrants 0.6 Mexican Residents 0.2 0.2 2010 0 0-4 0-8 0-9 0-11 0-12 0-15 0-16+ Highest grade of schooling completed 0 0-4 0-8 0-9 0-11 0-12 0-15 0-16+ Highest grade of schooling completed Source: Mexican Census (1990, 2000, and 2010), US Census (1990 and 2000) and ACS (2009). Trend in self-selection patterns 23 Self-selection on wages Actual and Counterfactual Wage Densities, Men 1990 Counterfactual: Mex Imm in US Actual: Mex Residents Counterfactual: Mex Imm in US 0 0 .1 .2 .2 .3 .4 .4 .5 .6 Actual: Mex Residents Actual and Counterfactual Wage Densities, Men 2000 -3 -2 -1 0 lnw 1 2 3 -3 -2 Differences between Actual and Counterfactual Wage Densities, Men 1 2 3 2 3 Double Differences Men 2000-1990 .015 1990 0 lnw -.04 -.01 -.02 -.005 0 0 .02 .005 .04 .01 2000 -1 -3 -2 1990 Skill prices Trend in self-selection patterns -1 0 lnw 1 2 3 -3 -2 1990 Skill prices -1 0 lnw 1 24 Self-selection on wages Male wage densities 1990 skill prices Difference between Actual and Counterfactual .04 1990 -.04 -.085 -.05 -.02 0 1990-2000 0 .05 .02 .085 2000 Double Differences -2 -1 0 lnw 2 3 2 3 1990 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 .05 .02 .085 2010 1 .04 -3 -.04 -.085 -.05 -.02 0 0 1990-2010 -3 Trend in self-selection patterns -2 -1 0 lnw 1 25 Self-selection on wages Female wage densities 1990 skill prices Difference between Actual and Counterfactual .04 1990 .05 .02 .085 2000 Double Differences -.04 -.085 -.05 -.02 0 0 1990-2000 -2 -1 0 lnw 2 3 2 3 1990 -3 -2 -1 0 lnw 1 2 3 .05 .02 .085 2010 1 .04 -3 -.04 -.085 -.05 -.02 0 0 1990-2010 -3 Trend in self-selection patterns -2 -1 0 lnw 1 -3 -2 -1 0 lnw 1 2 3 26 Index 1. Introduction 2. Self-selection of Mexico-US migrants 3. Trend in self-selection patterns 4. Possible hypothesis 5. Concluding remarks 27 Migration costs What could be driving the shift towards less positive selection? Some of the obvious migration costs do not seem to be the reason, since they are likely to be increasing over time. Tighter immigration policy from the US Higher cost of illegally crossing the border Border Patrol Officers Cost of Coyote Thousands Constant US Dollars, 2009 25 Source: Mexican Migration Project (MMP128) based on US Immigration and Naturalization Service until 2005. From 2006, Department of Homeland Security, CBP Fiscal Year Review Factsheets, 2006-2009. Possible hypothesis 2008 2004 2000 1996 1992 500 1988 0 1984 1,000 2008 5 2005 1,500 2002 10 1999 2,000 1996 15 1993 2,500 1990 20 1980 3,000 Source: Mexican Migration Project (MMP128), Microdata. 28 Networks and probability of migration This implies that other important migration costs that affect disproportionately the lower end of the skills distribution could be decreasing over time. • Networks are an important candidate. Probability of migration Logit estimation Dep. var.: dummy variable for Mexican immigrant in the U.S. Network Men Men 7.52*** 4.33*** 5.91*** (0.355) (0.317) No 440,882 Yes 440,882 No 457,717 Yes 457,717 (0.300) Controls Education Age Married Children State fixed effects Controls flexible by year Observations Women Women 3.20*** (0.370) Data sources for Mexico:1990 and 2000 population censuses. Data sources for the U.S.: 1990 and 2000 population censuses. Network for 1990: % of households with at least one member with migration experience to the US within state of origin (source ENADID92). Network for 2000: % of households with at least one member with migration experience to the US within state of origin (source ENADID97). Possible hypothesis 29 Networks and probability of migration Probability of migration Logit estimation Dep. var.: dummy variable for Mexican immigrant in the U.S. Men Men Women Women 0 7.63*** 4.26*** 7.69*** 4.88*** (0.331) (0.388) (0.346) (0.404) 1-4 6.73*** 3.68*** 4.87*** 2.37*** (0.337) (0.389) (0.354) (0.403) 5-8 7.16*** 3.85*** 4.89*** 2.22*** (0.311) (0.369) (0.328) (0.384) 9 7.96*** 4.84*** 5.48*** 2.93*** (0.345) (0.393) (0.366) (0.414) 10-11 7.90*** 4.68*** 6.36*** 3.65*** (0.375) (0.422) (0.411) (0.459) 12 8.19*** 4.99*** 6.16*** 3.58*** (0.331) (0.379) (0.346) (0.396) 13-15 7.77*** 4.56*** 6.28*** 3.69*** (0.364) (0.412) (0.387) (0.435) 16+ 7.57*** 4.41*** 5.82*** 3.33*** (0.378) (0.425) (0.409) (0.451) Controls Education Age Married Children State fixed effects Controls flexible by year No Yes No Yes 440,882 440,882 457,717 457,717 Network interacted with highest grade of schooling completed Observations Data sources for Mexico:1990 and 2000 population censuses. Data sources for the U.S.: 1990 and 2000 population censuses. Network for 1990: % of households with at least one member with migration experience to the US within state of origin (source ENADID92). Network for 2000: % of households with at least one member with migration experience to the US within state of origin (source ENADID97). Possible hypothesis 30 Networks and probability of migration Percentage of households with at least one member that migrated to the US to work or search for a job in any year 14 Percentage of households that had at least one migrant to the US during the last 5 years 6 13.00 % 13 5 4.93 % 4 % 12 2.83 % % 3 11.56 % 2 11 1 0 10 1992 1997 Source: Demographic Dynamics National Survey Mexico (ENADID) 1992 and 1997 Possible hypothesis 2000 2010 Source: Mexican Census 2000 and 2010 31 Networks and self-selection on wages Male, 1990-2000 Original estimation Actual: Mex Residents Counterfactual: Mex Imm in US 0.6 Actual: Mex Residents Counterfactual: Mex Imm in US 0.6 1990 0.5 0.5 0.4 0.4 0.3 0.3 0.2 0.2 0.1 0.1 Self-selection 1990 2000 Self-selection 2000 0.07 0.03 2000 1990 -0.01 -0.05 0 0 -3 -2 -1 0 lnw 1 2 3 -0.09 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 Estimation including networks 0.6 Self-selection 1990 Actual: Mex Residents Counterfactual: Mex Imm in US Actual: Mex Residents Counterfactual: Mex Imm in US 0.6 1990 0.5 0.07 2000 0.5 0.4 1990 0.03 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0 0 -3 -2 -1 Possible hypothesis 0 lnw 1 2 3 Self-selection 2000 2000 -0.01 -0.05 -0.09 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 32 Networks and self-selection on wages Male, 1990-2010 Original estimation Actual: Mex Residents Counterfactual: Mex Imm in US 0.6 Actual: Mex Residents Counterfactual: Mex Imm in US 0.7 1990 0.5 0.6 0.4 0.5 Self-selection 1990 2010 0.07 0.03 1990 2010 0.4 0.3 Self-selection 2010 -0.01 0.3 0.2 0.2 0.1 -0.05 0.1 0 -0.09 0 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 Estimation including networks Actual: Mex Residents Counterfactual: Mex Imm in US 0.6 Actual: Mex Residents Counterfactual: Mex Imm in US 0.8 1990 2010 0.7 0.5 Self-selection 1990 0.07 0.6 0.4 Self-selection 2010 0.03 0.5 0.4 0.3 1990 2010 -0.01 0.3 0.2 0.2 0.1 -0.05 0.1 0 0 -3 -2 -1 Possible hypothesis 0 lnw 1 2 3 -0.09 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 33 Networks and self-selection on wages Differences in original estimation Self-selection 1990 Male Double differences Differences including networks Self-selection 1990 Self-selection 2000 Self-selection 2000 Original Including Networks 0.02 0.07 0.07 1990 vs 2000 0.015 2000 0.01 1990 0.03 0.03 1990 0.005 2000 -0.01 -0.01 -0.05 -0.05 0 -0.005 -0.01 -0.015 -0.09 -0.09 -3 -2 -1 0 lnw 1 2 -3 3 Differences in original estimation Self-selection 1990 -2 -1 0 lnw 1 2 -3 3 Differences including networks Self-selection 1990 Self-selection 2010 -2 -1 0 lnw 1 2 3 Double differences Self-selection 2010 Original Including Networks 0.04 0.07 0.07 0.03 0.03 1990 vs 2010 0.03 0.02 1990 2010 -0.01 -0.01 -0.05 -0.05 0.01 1990 2010 0 -0.01 -0.02 -0.03 -0.04 -0.09 -0.09 -3 -2 Possible hypothesis -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 34 Networks and self-selection on wages Differences in original estimation Self-selection 1990 Differences including networks Self-selection 1990 Self-selection 2000 0.12 0.12 0.07 0.07 0.02 0.02 1990 2000 -0.03 -0.03 -0.08 -0.08 -0.13 -0.13 -3 -2 -1 0 lnw 1 2 Self-selection 2000 Original 0 1990 2000 -0.02 -0.04 -2 -1 0 lnw 1 2 3 -3 Differences including networks Self-selection 2010 Self-selection 1990 0.08 0.08 0.03 0.03 Including Networks 1990 vs 2000 -3 3 Double differences 0.02 Differences in original estimation Self-selection 1990 Female -2 -1 0 lnw 1 2 3 Double differences Self-selection 2010 Original Including Networks 1990 vs 2010 0.04 0.02 0 2010 -0.02 2010 -0.02 -0.02 -0.07 -0.07 1990 -0.04 1990 -0.12 -0.12 -3 -2 -1 Possible hypothesis 0 lnw 1 2 3 -0.06 -3 -2 -1 0 lnw 1 2 3 -3 -2 -1 0 lnw 1 2 3 35 Possible demand effect Additionally, a demand effect could be playing a role. • If the US demands unskilled Mexican workers, and Mexicans have become more educated over time, the flow of unskilled Mexicans that previously looked like positive selection is now starting to look like negative selection. schooling Demand for immigrants Possible hypothesis 36 Possible demand effect The proportion of Mexican residents with 5-8 and 9 years of schooling has decreased. Meanwhile, the percentage of recent Mexican immigrants with such schooling level has not changed significantly. Highest grade of schooling completed by males (%) Mexican Residents 30% 1990 2000 Recent Mexican Immigrants 35% 2010 2000 1990 U.S. Natives 45% 2010 2010 40% 30% 25% 2000 1990 35% 25% 15% Percentage Percentage Percentage 20% 20% 30% 25% 20% 15% 10% 15% 10% 10% 5% 5% 5% 0% 0% 0 1--4 5--8 9 10--11 12 13--15 16+ Highest grade of schooling completed Possible hypothesis 0% 0 1--4 5--8 9 10--11 12 13--15 16+ Highest grade of schooling completed 0 1--4 5--8 9 10--11 12 13--15 16+ Highest grade of schooling completed 37 Possible demand effect Highest grade of schooling completed by males (%), 1990 and 2010 35% 30% Mexican Residents 1990 Mexican Residents 2010 Mexican immigrants 1990 Mexican Immigrants 2010 Percentage 25% 20% 15% 10% 5% 0% 0 1-4 5-8 9 10-11 12 Highest grade of schooling completed 13-15 16+ 38 Index 1. Introduction 2. Self-selection of Mexico-US migrants 3. Trend in self-selection patterns 4. Possible hypothesis 5. Concluding remarks 39 Concluding remarks Contrary to a simple Borjas model, there is evidence of intermediate selection of Mexican immigrants to the US. However, some studies have also found that migrants may be negatively selected. New data on the 2010 Mexican census has shown that there may be a shift towards less positive selection over time. It may be worth studying the reasons behind this shift, especially whether networks are playing a role, or whether there is a demand effect. Concluding remarks 40