The Effects of North American Free Trade Agreement and United States Farm Policies on Illegal Immigration and Agricultural Trade

Abstract

We analyze the effects of the North American Free Trade Agreement (NAFTA) and United States farm subsidies on U.S.-Mexican illegal immigration and agricultural trade. The theoretical analysis develops an integrated trade-migration model and shows that NAFTA and U.S. subsidies exacerbate the illegal labor flow and increase U.S. exports. The theoretical analysis is empirically implemented by simultaneous estimation and simulation analysis. The analysis shows that NAFTA increased the number of undocumented workers to U.S. agriculture and U.S. farm exports to Mexico by an average of 1573 and $6.82 billion, respectively. U.S. farm subsidy reduction decreases unauthorized entry marginally and U.S. farm exports by an average of $3.2 billion.

US immigration policies and dynamics of cross‐border workforce in agriculture

“…These findings confirm the results of Devadoss and Luckstead () and Luckstead et al. () who found that border and domestic enforcements adversely impact the migration of agricultural workers.…”

“…20 These effects can be seen in the first-order conditions (15-18). decline in the unauthorised flow by 45.891% from 19.968 million hours to 10.804 million hours, as discussed above, is both direct and indirect effects of higher b and d. These findings confirm the results of Devadoss and Luckstead (2011) and Luckstead et al (2012) who found that border and domestic enforcements adversely impact the migration of agricultural workers.…”

Subsidy Incidence in Factor Markets: An Experimental Approach

“…Government-supported crop insurance and disaster payments also have been found to have a significant unintended impact on land use, notably on increasing conversion rates of native grassland to cropland (Claassen, Cooper, and Carriazo, 2011). Evidence of subsidy impacts on agricultural wage rates and illegal immigration (Luckstead, Devadoss, and Rodriguez, 2012) further illustrates the complex interactions and influence of government payments in agricultural factor markets.…”

Contributions of U.S. Crop Subsidies to Biofuel and Related Markets

“…Producers receive a price P P F À Á , which is equal to MC and thus to the consumer/market price plus the subsidy. This representation of price relationship incorporating U.S. crop subsidies follows the studies by Devadoss and Luckstead (2010) and Luckstead, Devadoss, and Rodriguez (2010). The feedstock market-clearing condition states that feedstock supply F S ð Þ is equal to feedstock used for food consumption F D ð Þ, biofuel production F B ð Þ, and exports F X ð Þ:…”