Do minimum wages help explain declining Mexico-U.S. migration?

Abstract

This paper finds that minimumwagesof the United States and Mexicomeasured carefully in Purchasing Power Parity (PPP) help explain the well-documented post-2010 fall in Mexico-U.S.migration. Declining inequality also plays a role since the purchasing power of the minimum wage increased relative to the average wage in Mexico. Using time-series data,we find two positive partial correlations between minimum wages and net migration: one driven by wage differentials between the two countries and the other by wage inequality in Mexico. However, these results are found to be mediated through migrantsocial networks. Though relative wages are a classic migration driver,this paper is the first to explore the full minimum-average wagenexus. One clear policy implication of these results is that maintaining the real purchasing power of minimum wages helps reducemigration.An in-depth analysis is needed to demonstrate the causality of these correlations.