Liberalization and Incentives for Labor Migration: Theory with Applications to NAFTA

James R. Markusen, Stephen Zahniser

NBER Working Paper No. 6232
Issued in October 1997
NBER Program(s):   ITI

One of the motivations for NAFTA from the US point of view was to reduce the" incentives for Mexican migration into the US. Unskilled rural males are a primary source of" illegal immigration and also Mexico's relatively abundant factor. This group should therefore" be made better off by trade and investment liberalization according to the traditional" Heckscher-Ohlin model. Existing evidence, along with best guesses of many experts in the" area, suggest that NAFTA is unlikely to have a significant positive impact on this group least not within the time frame of several decades. We draw on a number of recent theoretical" contributions in order to offer reasons why NAFTA may not raise the wages of unskilled" Mexican workers.

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Published: Trade and Factor Mobility, deMelo, J., R. Faini and K. Zimmerman, eds., London: Cambridge University Press, 1999, pp. 263-294.

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