Seeking Social Security: An Alternative Motivation for Mexico‐US Migration

Abstract

In this analysis we investigate the degree to which the absence of effective pension systems may generate motivations for international migration as a means of self-financing retirement.Using ethnosurvey data gathered in selected Mexican communities and US destination areas, we estimate models to predict the odds of US migration from indicators of relative wages and whether or not jobs in Mexico were covered by that country's social security system. We find that by holding constant the binational differential in expected wages, the odds of out-migration were much higher for male household heads working in jobs that were not covered by social security compared with those working in jobs that enjoyed such coverage. Subsequent analyses showed that the odds of receiving a pension in old age were systematically higher for former US migrants, and that the likelihood of pension receipt rose steadily as the number of US trips and amount of US experience accumulated.

Old-Age Wealth in Mexico

“…The relevance of family factors was somewhat expected, given that Mexico is a country with low institutional coverage to secure economic well-being in old age, thus enhancing the role of the family. This is consistent with prior research that has found that alternative strategies to formal labor market participation, such as international migration, may be powerful determinants of old age security in Mexico (Sana and Hu 2007;Sana and Massey 2000;Wong et al 2007). Furthermore, what is somewhat surprising is that, at least in our models, the labor market career shows so little association with net worth, with only status of employment obtaining significance in some cases.…”

What do we know about the impact of social protection programmes on the decision to migrate?

“…migration). For instance, more concretely, in the absence of effective retirement provisions, savings derived from migration may be seen as a substitute for formal pensions (Sana & Massey, 2000). Such a simple framework implicitly implies that migration and social protection are substitutes and that greater coverage of social protection programmes crowds out migration.…”

“…These studies show that those who have access to social insurance have a lower propensity to migrate, while those without access were more likely to migrate, possibly because of concerns about poor retirement prospects at home (Sana & Hu 2007;Sana & Massey 2000). The authors argue that savings built up during the course of migration can be seen as a substitute for a formal pension.…”

Buying membership in the transnational community:migrant remittances, social status, and assimilation

“…Upon securing employment in a more developed area, the migrant generates a flow of cash back to the household. These remittances are used to cope with local market failures, such as the lack or malfunctioning of capital markets, crop insurance, futures markets, unemployment insurance (Stark 1991), or social security (Sana & Massey 2000). This household strategy does not need to be investment-oriented and may simply be a response to tight labor market conditions and lack of opportunities.…”