The Effect of Mexican Workforce Migration on the Mexican Maquiladora Labor Market

Juliano Assunção

The Mexican maquiladora industry constitutes an interesting economic environment in which to study the impact of migration on the labor market. Because most of the maquiladora employees are interstate migrants, migration flows can arguably be directly associated with the shift in the labor supply curve. Moreover, the relocation of U.S. firms to China has changed the configuration of the maquiladora industry. The impact of migration on the labor market, however, is still a matter for debate in the migration literature. Atkinson and Ibarra contribute to this literature by investigating the effects of internal interstate migration and international return migration on the wages and employment of skilled and unskilled workers in the textile maquiladora industry.

The results are derived in two steps. First, the authors use the 2000 Mexican census to estimate the effect of interstate migration and international return migration on wages. From this analysis, the authors compute the effect of migration on the wages of skilled and unskilled workers from 1990 to 2000. The two main right-hand-side variables regarding migration are considered endogenous and are thus instrumented with the corresponding network effect measures. The authors’ concern about the endogeneity of migration is appropriate and consistent with the literature on the determinants of migration. Indeed, table 1 shows that natives and immigrants are different. Solving this problem is a much harder issue, however. The use of networking effects as a source of exogenous variation is interesting and finds support in the literature, but it also has its limitations. The hypothesis here is that wages are affected by networking effects only through the migration channel. In particular, Atkinson and Ibarra assume that the existence of immigrant groups does not affect the balance of power between firms and workers, which could, in principle, increase or decrease wages. Unfortunately, the analysis is restricted to this set of instruments, so the robustness of the results under different assumptions cannot be checked.

A really surprising result, reported in table 5, is that the effects of interstate migration and international return migration point in opposite directions. While the negative coefficient for interstate immigration suggests an increase in the labor supply, the only way to explain the positive and quantitatively high coefficient for return migration is through an increase in the average turnover rate or a change on the demand side. This result is even more puzzling given the extremely low percentage of returning international immigrants in the population: this type of immigrant accounts for less than 1 percent of the population in thirteen out of twenty states (see table 3).

The second step is based on the state-level panel data for 1998–2001 and studies the effect of wages on the employment of skilled and unskilled workers in the maquiladora industry. The authors derive structural cost and share equations from which they compute the own-price and cross-price elasticities of demand for skilled and unskilled workers. Results indicate that the demand for skilled labor is more elastic (to wage) than the demand for unskilled workers, as found in similar studies for other countries in the region.

The impact of total (interstate and international) immigration on employment is obtained by combining the two steps described above. This combination, in turn, involves matching the two data sets, which is not directly feasible. The census identifies laborers working in the manufacturing sector, without specifying whether their employer is a maquiladora. A similar problem arises with the immigration measures, which come from the same source. As a consequence, the results comprise the effect of international return and interstate migration on the wages of skilled and unskilled workers in the manufacturing sector; and the effect of wage changes on employment in the maquiladora sector. In other words, the estimated effects of migration on wages apply to the whole manufacturing sector, such that only the estimated effects of wages on employment are clearly specific to the maquiladora industry. The underlying hypothesis behind the authors’ interpretation is that wage responses do not differ substantially in the manufacturing and maquiladora industries. Without this assumption, it is not possible to combine the two steps.

In summary, the...