The Role of Family Networks, Coyote Prices and the Rural Economy in Migration from Western Mexico: 1965-1994, Working Paper 9910, FRB Dallas

The Mexico-U.S. wage gap alone cannot explain the large increases in migration from Mexico to the U.S. in the last three decades. This paper explores three alternative migration determinants: family migrant networks, the Mexican migrant-smuggling (coyote) industry and the rural economy. The premise of this paper is that successive cohorts of migrants and an expanding coyote industry have led to declines in the costs of migration partly through the formation of networks, while the long-term decline of the rural economy has led to increases in the gains to U.S. migration. Using unique, source-country data collected by the Mexican Migration Project from both migrant and non-migrant households in western Mexico, this paper estimates how the probability of migrating is influenced by the above determinants in two ways. First, the effect of coyote prices and economic output are estimated using an instrumental variables strategy in which coyote prices are instrumented for using border enforcement hours. Second, family network effects are estimated controlling for individual fixed effects. My findings suggest that sibling networks are by far the most significant determinant of initial migration, although falling coyote prices and worsened economic conditions have also been significant push/pull factors in out migration from western Mexico over this time period. Acknowledgements I am grateful to Patrick Bayer, Janet Currie, Gordon Hanson, Wei-Yin Hu, Rosemary Hyson, Douglas Massey, Jean-Laurent Rosenthal, Graciela Teruel, Duncan Thomas and all the participants of the UCLA Graduate Student Workshop for helpful comments. I also thank the University of California Institute of Global Conflict and Cooperation for financial support. The views expressed are those of the author and do not necessarily reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System. Any remaining errors are my own. JEL Classification: F22, J10, J61, R23