The Effects of Migration on Child Health in Mexico

Mexico has a long history of sending migrants to the United States, and that flow has grown over time. At any given time, the equivalent of one-eighth of Mexico's labor force is employed in the United States.¹ Remittances from these migrants were estimated as high as U.S.$14.5 billion in 2003. This amount is equivalent to about 1.5 percent of Mexico's GDP, and it surpasses tourism and foreign direct investment as a source of foreign currency.²

A decade after the North American Free Trade Agreement (NAFTA) ushered in the free movement of goods and capital, labor mobility between the United States and Mexico remains a contentious issue in U.S.-Mexico relations. In the Guanajuato Proposal of 2001, the presidents of the two countries pledged to work toward more orderly migration between the two countries, discussing proposals for a new temporary worker program and for clarifying the legal status of undocumented Mexicans in the United States.³ Security concerns halted this process following the September 2001 terrorist attacks on the United States. But talks have resumed, and President Bush launched discussions of immigration reform within one week of being elected to a second term.⁴

A comprehensive understanding of the impact of migration on both sides of the border is a prerequisite for making informed policy decisions. A large literature focuses on the consequences of immigration for the U.S. economy and U.S. workers. Borjas provides a survey of this literature. He concludes that the economic benefits of immigration are relatively small on aggregate, but the distributional consequences can be large.⁵ Borjas argues that Mexican immigrants are "negatively selected," meaning that they tend to be predominantly low skilled. This can have harmful effects on the lowest-skilled Americans.

Economists have given relatively little attention to the impact of emigration on the sending country, although the large prevalence of migration and the size of the remittance flows are likely to have a significant impact on the Mexican economy and on Mexican households. At an aggregate level, remittances have short-run effects (on prices and exchange rates) and long-run implications (through their impact on productivity, inequality, and poverty). At the microeconomic level, early sociological studies emphasize that remittances mostly finance consumption and housing expenditures, with limited dynamic effects.⁶ More recent research finds that migration is associated with higher levels of entrepreneurship and educational attainment among migrants' children.⁷

This paper investigates the impact of migration on human capital accumulation, focusing on child health outcomes. This is an important aspect of well-being and a key determinant of future productivity. Our results provide evidence that the impact of migration exceeds the direct effects of remittances, suggesting that the additional indirect benefits and costs of migration should be considered in the design of optimal migration policy.

The identification of the health effects of migration is complicated by the fact that migrants are not randomly drawn from the general population. Individuals in poor health are unlikely to be able to endure the rigors of crossing the border into the United States, while the most prosperous and healthy rural Mexicans are not likely to find that the benefits of illegal migration outweigh their other options in Mexico. Another issue is that unobserved shocks such as crop failures or natural disasters may be both an impetus for migration and a cause of worsening health conditions in the community. Consequently, a simple comparison of the health of migrants and nonmigrants and their children will not provide reliable estimates of the effects of migration.

In this paper we use instrumental variables to account for these difficulties and provide credible estimates of the impact of migration on child health. In turn, these estimates allow quantification of some of the benefits of migration for human capital accumulation in the home country. We draw on a nationally representative demographic...