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Title:Illegal migration, wages, and remittances: semi-parametric estimation of illegality effects PDF Logo
Authors:Schluter, Christian
Wahba, Jackline
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4527
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 non-parametrically. 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.
Subjects:Illegal migration
illegality effects
counterfactuals
selection
control functions
non-parametric estimation
intermediate outcomes
Mexican Migration Project
JEL:J61
J30
J40
Persistent Identifier of the first edition:urn:nbn:de:101:1-20091105989
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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