Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2015:25: International Import Competition and the Decision to Migrate: Evidence from Mexico

Kaveh Majlesi () and Gaia Narciso ()
Additional contact information
Kaveh Majlesi: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Gaia Narciso: Department of Economics, Trinity College Dublin

Abstract: We analyze the effects of the increase in China’s import competition on Mexican domestic and international migration. We exploit the variation in exposure to competition from China, following its accession to the WTO in 2001, across Mexican municipalities and estimate the effect of international competition on the individual decision to migrate. Controlling for individual and municipality features, we find that individuals living in municipalities more exposed to Chinese import competition are more likely to migrate to other municipalities within Mexico, while a negative effect is found on the decision to migrate to the US. In particular, we find that Chinese import competition reduces migrants’ negative self-selection: the rising international competition lowers the likelihood of low-educated, low-income people to migrate to the US, by making them more financially constrained.

Keywords: Import competition; Migration; Trade; Mexico; WTO; China

JEL-codes: F14; F16; F22; O15; R12; R23

35 pages, August 17, 2015

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