Migration Experience and Earnings in the Mexican Labor Market

Selection, selection, selection: the impact of return migration

“…Lacuesta (2010) finds an 11% wage gap between returning migrants and observationally equivalent non-migrants in Mexico, but argues that this premium is the result of pre-migration differences in ability and not human capital gains derived from migration from Mexico. Reinhold and Thom (2013) also find the labour market experience accumulated in the U.S. increases earnings of return migrants in Mexico. Wahba (2007) examines the case of Egypt, based on earlier data (for 1988 and 1998) and finds stronger evidence that overseas employment and temporary migration results in a wage premium upon return; on average, return migrants earn around 38% more than non-migrants.…”

Occupational choice of return migrants

“…For instance, among Mexican return migrants who worked in the US, undocumented workers earned less when they returned than migrants who had entered the US legally [12]. Migrants with legal status are more likely to get a job that matches their skills.…”

“…Migrants who spend more time abroad are likely to have fewer chances of gaining employment when they return to their home country than migrants who have a shorter work experience abroad because the reservation wage (the lowest wage they would accept for a particular job) of long-duration migrants may be higher. In that case, an individual may decide to stay non-employed until a job with a higher wage is available [12]. It is also possible that these return migrants will leave the formal employment sector altogether and go into self-employment.…”

“…For instance, evidence using data from the Mexican Migration Project shows that Mexican migrants to the US who worked in a job that was commensurate with their skills earned a wage premium of up to 8.7% when they returned home [12]. Similarly, analysis using data for 10 Eastern European countries that joined the EU in 2004, along with Bulgaria, Romania, and Turkey, found that working in Western European countries earns the relatively bettereducated return migrants a wage premium of about 33% over the earnings of nonmigrants.…”

Who benefits from return migration to developing countries?

“…In addition to students, migrant workers also accumulate human capital by acquiring skills abroad that allow them to earn a wage premium compared with non-migrants when they return home [6], [7]. A few studies have examined the impact of experience abroad on the human capital accumulation of return workers.…”