EFFECT OF WAGE INEQUALITY ON MIGRATION BETWEEN MEXICO-UNITED STATES: AN EMPIRICAL ASSESSMENT USING MEXICAN AND UNITED STATES MICRO-DATA

Raw income differentials between the two countries have gone from 2.9 times larger in the US than in Mexico during the 1970s to 3.2 times larger in 2010. Along with the widening of the regional economic and wage gap, the international migration from Mexico to US has increased from less than 120 thousand migrants a year in 1970 to more than half million migrants a year in 2010. Using United States and Mexican micro-data on socioeconomic characteristics of workers living in communities close to the border, this paper compares wages of identical individuals both sides of the border after controlling for unobserved differences between the productivity of migrants and non-migrants as well as explain the Mexican social and economic policies to indirect control of emigration in the country. We found that domestic-born, domestic-educated workers in the US side gain around 3.4 times the wage of an identical domestic-born, domestic-educated worker in Mexico. However, Mexican-born-educated legal workers in the US side of the border gain 2.8 times the wage of an identical worker in the Mexican side. Illegal workers in the US side of the border gain only 1.8 times more than their Mexican counterparts, which may not represent the larger benefit of moving, as their wages increase 1.6 times just for moving close to Mexican side of the border.