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Taking One for the Team: Shocks at Destination and Households' Supply of Migrants

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  • Fajardo, Gustavo
  • Gutiérrez, Emilio
  • Larreguy, Horacio

Abstract

We study how unemployment shocks in the United States affect Mexican households’ migration decisions. We emphasize households at origin (as op-posed to individuals) as the decisionmaking units for migration decisions. We show that negative changes in US labor market conditions, which are diffused by household members at destination to those at origin, lead to heterogeneous migration responses by Mexican households that have members abroad. We argue that this heterogeneous response is driven by the relative magnitudes of income and substitution effects after a negative employment shock in the United States. While the income effect dominates the substitution effect for poor households, the opposite holds for richer households. These results also inform the literature on selection patterns in international migration, which suggests a new channel through which negative shocks in the host economy negatively affect the skill composition of subsequent migrants.

Suggested Citation

  • Fajardo, Gustavo & Gutiérrez, Emilio & Larreguy, Horacio, 2017. "Taking One for the Team: Shocks at Destination and Households' Supply of Migrants," Research Department working papers 1082, CAF Development Bank Of Latinamerica.
    • Handle: RePEc:dbl:dblwop:1082
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    Cited by:

    1. Caballero, María Esther & Cadena, Brian C. & Kovak, Brian K., 2023. "The international transmission of local economic shocks through migrant networks," Journal of International Economics, Elsevier, vol. 145(C).
    2. Luis Arango & Dolores Mata & Nataly Obando, 2015. "Echoes of the crises in Spain and US in the Colombian labor market: a differences-in-differences approach," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 6(4), pages 441-477, November.
    3. Gröger, André, 2021. "Easy come, easy go? Economic shocks, labor migration and the family left behind," Journal of International Economics, Elsevier, vol. 128(C).

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    Keywords

    Economía; Investigación socioeconómica; Trabajo y protección social;
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