We study the evolution of trade liberalization's effects on Brazilian local labor markets. Regions facing larger tariff cuts experienced prolonged declines informal sector employment and earnings ...relative to other regions. The impact of tariff changes on regional earnings 20 years after liberalization was three times the effect after 10 years. These increasing effects on regional earnings are inconsistent with conventional spatial equilibrium models, which predict declining effects due to spatial arbitrage. We investigate potential mechanisms, finding empirical support for a mechanism involving imperfect interregional labor mobility and dynamics in labor demand, driven by slow capital adjustment and agglomeration economies. This mechanism gradually amplifies the effects of liberalization, explaining the slow adjustment path of regional earnings and quantitatively accounting for the magnitude of the long-run effects.
A growing body of research examines the regional effects of trade liberalization using a weighted average of trade policy changes across industries. This paper develops a specific-factors model of ...regional economies that provides a theoretical foundation for this intuitively appealing empirical approach and also provides guidance on treatment of the nontraded sector. In the context of Brazil's early 1990s trade liberalization, I find that regions facing a 10 percentage point larger liberalization-induced price decline experienced a 4 percentage point larger wage decline. The results also confirm the empirical relevance of appropriately dealing with the nontraded sector. (JEL F13, F16, O19, O24) PUBLICATION ABSTRACT
This paper demonstrates that low-skilled Mexican-born immigrants' location choices respond strongly to changes in local labor demand, which helps equalize spatial differences in employment outcomes ...for low-skilled native workers. We leverage the substantial geographic variation in labor demand during the Great Recession to identify migration responses to local shocks and find that low-skilled Mexican-born immigrants respond much more strongly than low-skilled natives. Further, Mexican mobility reduced the incidence of local demand shocks on natives, such that those living in metro areas with a substantial Mexican-born population experienced a roughly 50 percent weaker relationship between local shocks and local employment probabilities.
We use firm-level data on U.S. multinationals to show how offshoring affects domestic employment within and across firms. We introduce a new instrument for offshoring, bilateral tax treaties, which ...reduce the cost of offshore activities. We find substantial heterogeneity in effects. A 10% increase in affiliate employment drives a 1.3% increase in employment at the U.S. parent firm, with smaller effects at the industry and regional levels. In contrast, offshoring by vertical multinationals drives declining employment among nonmultinationals in the same industry, and firms opening new affiliates exhibit smaller domestic employment growth than those expanding existing affiliates.
We use both longitudinal administrative data and cross-sectional household survey data to study the margins of labor market adjustment following Brazil's early 1990s trade liberalization. We document ...how workers and regional labor markets adjust to trade-induced changes in local labor demand, examining various adjustment margins, including earnings and wage changes; interregional migration; shifts between tradable and nontradable employment; and shifts between formal employment, informal employment, and non-employment. Our results provide insight into the regional labor market effects of trade, and have important implications for policies that address informal employment and that assist trade-displaced workers.
We develop a specific-factors model of regional economies that includes two types of workers, skilled and unskilled. The model delivers a simple equation relating trade-induced local shocks to ...changes in local skill premia. We apply the methodology to Brazil's early 1990s trade liberalization and find statistically significant but modest effects of liberalization on the evolution of the skill premium between 1991 and 2010. The methodology uses widely available household survey data and can easily be applied to other countries and liberalization episodes.
•Visa policies complement enforcement in deterring unauthorized immigration.•Legal entry bans deter unauthorized immigrants if future legal immigration is likely.•Temporary work visas yield similar ...deterrence to increases in permanent residence.
How would increasing the number of visas available to potential migrants affect unauthorized immigration from Mexico to the U.S.? Current U.S. policy bans people who are deported from receiving legal status for a period of time. This policy aims to serve as an additional deterrent to unauthorized immigration, but may be ineffective given that most potential Mexican migrants have an extremely low probability of ever being able to legally move to the U.S. We develop a dynamic discrete location choice model, which we estimate using data from the Mexican Migration Project, and consider various counterfactual policies that vary the intensity of enforcement and access to work visas. We find that legal entry bans for deported individuals are ineffective at current rates of legal immigration, but that increased legalization rates would amplify the deterrent effects of deportation. We also show that a temporary work visa program would yield similar deterrent effects as an increase in permanent legalization without resulting in very large increases in the total stock of migrants residing in the U.S. These findings have important implications for structuring future immigration reforms.
In this article, we show how to use administrative data from the Matrícula Consular de Alta Seguridad (MCAS) identification card program to measure the joint distribution of sending and receiving ...locations for migrants from Mexico to the United States. Whereas other data sources cover only a small fraction of source or destination locations or include only very coarse geographic information, the MCAS data provide complete geographic coverage of both countries, detailed information on migrants' sources and destinations, and a very large sample size. We first confirm the quality and representativeness of the MCAS data by comparing them with well-known household surveys in Mexico and the United States, finding strong agreement on the migrant location distributions available across data sets. We then document substantial differences in the mix of destinations for migrants from different places within the same source state, demonstrating the importance of detailed substate geographical information. We conclude with an example of how these detailed data can be used to study the effects of destination-specific conditions on migration patterns. We find that an Arizona law reducing employment opportunities for unauthorized migrants decreased emigration from and increased return migration to Mexican source regions with strong initial ties to Arizona.
We document the transmission of social distancing practices from the United States to Mexico along migrant networks during the early 2020 Covid-19 pandemic. Using data on pre-existing migrant ...connections between Mexican and U.S. locations and mobile-phone tracking data revealing social distancing behavior, we find larger declines in mobility in Mexican regions whose emigrants live in U.S. locations with stronger social distancing practices. We document the absence of confounding pre-trends and use a variety of controls to rule out the potential influence of disease transmission, migrant sorting between similar locations, and remittances. Given this evidence, we conclude that our findings represent the effect of information transmission between Mexican migrants living in the U.S. and residents of their home locations in Mexico. Our results demonstrate the importance of personal connections when policymakers seek to change fundamental social behaviors.
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