The Asymmetric Impact of Out-Migration and Return Migration on Wages in the Source Country: Evidence from Mexico

Abstract

This paper studies the impact of return migrants from the United States to Mexico on workers’ wages in Mexico and contrasts it with the effect of out-migration trends. The empirical estimation reveals that return migrants and nonmigrant workers are imperfect substitutes. The mechanism driving imperfect substitution is consistent with migrants’ foreign acquisition of human capital that is valued in the home-country labor market. The results suggest that occupation-specific experience in the United States drives imperfect substitution. Imperfect substitution generates distributional and sign asymmetries on the impact of wages for out-migrant- and return-migrant-induced labor supply shocks of the same magnitude.