Illegal migration, wages and remittances- semi-parametric estimation of illegality effects


Wahba, Jackline and Schluter, Christian (2009) Illegal migration, wages and remittances- semi-parametric estimation of illegality effects. Southampton, UK, University of Southampton, 38pp. (Discussion Papers in Economics and Econometrics 0913).

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Description/Abstract

We consider the issue of illegal migration from Mexico to the US, and examine whether the lack of legal status causally impacts on outcomes, specifically wages and remitting behavior. These outcomes are of particular interest given the extent of legal and illegal migration, and the resulting financial flows.

We formalize this question and highlight the principal empirical problem using a potential outcome framework with endogenous selection. The selection bias is captured by a control function, which is estimated nonparametrically. The framework for remitting is extended to allow for endogenous regressors (e.g. wages). We propose a new re-parametrisation of the control function, which is linear in case of a normal error structure, and test linearity.

Using Mexican Migration project data, we find considerable and robust illegality effects on wages, the penalty being about 12% in the 1980s and 22 % in the 1990s. For the latter period, the selection bias is not created by a normal error structure; wrongly imposing normality overestimates the illegality effect on wages by 50%, while wrongly ignoring selection leads to a 50% underestimate. In contrast to these wage penalties, legal status appears to have mixed effects on remitting behavior

Item Type: Monograph (Discussion Paper)
ISSNs: 0966-4246 (print)
Related URLs:
Keywords: illegal migration, illegality effects, counterfactuals, selection, control functions, non-parametric estimation, intermediate outcomes, mexican migration project
Subjects: H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HD Industries. Land use. Labor
E History America > E11 America (General)
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 71067
Date Deposited: 13 Jan 2010
Last Modified: 28 Mar 2014 15:27
Research Funder: ESRC
Projects:
Centre for Population Change: Understanding Population Change in the 21st Century
Funded by: ESRC (RES-625-28-0001)
Led by: Jane Cecelia Falkingham
1 January 2009 to 31 December 2013
Publisher: University of Southampton
URI: http://eprints.soton.ac.uk/id/eprint/71067

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