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A recently published paper co-authored by Brian Cadena finds deep connections between the U.S. and Mexican economies

That the job market in Phoenix can affect a child鈥檚 education in Mexico may strain credulity, but it鈥檚 nevertheless true, according to a recent听 co-authored by Brian Cadena, a University of Colorado Boulder associate professor of economics. 听

People from specific regions in Mexico tend to migrate to specific regions in the United States, and when U.S. work dries up in some areas, those migrants tend to return to Mexico, Cadena and his co-authors, of American University and of Carnegie Mellon, found.

Their paper, published in the Journal of International Economics in November, explores the U.S. labor market鈥檚 influence on the lives of people in Mexico by comparing how neighboring Mexican counties, or 鈥渕unicipios,鈥� fared during the Great Recession.

To perform their analysis, Cadena, Caballero and Kovak drew upon data from the Matr铆cula Consular de Alta Seguridad (MCAS), a governmental organization that issues identity cards to Mexican migrants.

Unlike either the U.S. or Mexican census, MCAS provides in-depth, granular information on migrant workers, specifying the municipios they leave and where in the United States they settle.

MCAS is a treasure trove, says Cadena. But it wasn鈥檛 long ago that researchers didn鈥檛 know how to use it. Cadena, Caballero and Kovak changed that with they published in 2018, which validated the MCAS data and thereby opened up a whole range of potential research.

鈥淭his identity-card data really allowed us to drill down and make tight comparisons between municipios,鈥� says Cadena. 听

The strength of networks

A key finding that emerged from the MCAS data is that people from the same municipio often move to the same cities and states in the United States. 鈥淧eople follow their networks,鈥� says Cadena. And these networks are so strong that migrants from nearby municipios often end up hundreds of miles apart in the States.

Migrants from the municipio of Dolores Hidalgo, for example, tend to move to Texas, while those from nearby Jaral del Progreso generally relocate to Chicago, California and the Southwest. Same region in Mexico, different time zones in the United States.

The close proximity of the municipios is important for the kind of research Cadena, Caballero and Kovak are doing, Cadena explains, because it cuts down on confounding variables. Neighboring municipios experience the same weather, suffer the same droughts, follow the same or similar laws, etc., which means differences in their economic outcomes are likely due to something they don鈥檛 share鈥攖he job market in the cities and states where their migrants moved.

To unearth these differences, Cadena, Caballero and Kovak measured the job-market losses in the U.S. regions linked to each municipio and then compared the economic outcomes in the municipios connected to harder-hit regions to those connected to softer-hit regions.

As it happens, labor demand in Texas survived the Great Recession relatively unscathed, so the municipios of the migrants who ventured there remained stable. The American Southwest, however, suffered some major blows, and so the municipios connected to that region exhibited several changes.

(Un)expected observations

Some of those changes were unsurprising, says Cadena.

鈥淲hen work dried up, more immigrants returned to Mexico, and fewer new immigrants came from that source community.鈥� This then led to a fall in remittances, or money transfers from migrant workers to their families back in Mexico. 听

Yet Cadena, Caballero and Kovak also observed some changes they didn鈥檛 expect. One was that more women joined the Mexican workforce.

鈥淭his is called the added worker effect,鈥� says Cadena. 鈥淲hen the primary earner of a household鈥濃�攊n this case, the migrant laborer鈥斺�渓oses their job, it鈥檚 a common reaction by the household to say, 鈥楲et鈥檚 send someone else to work.鈥欌��

Another unexpected change was a drop in school retention. 鈥淲e found some suggestive evidence that a loss of jobs in the United States reduced investment in schooling in Mexico. We saw more schooling dropout, especially at transition ages, when kids move from one level of schooling to the next,鈥� says Cadena.

Blurred lines and better choices

What do these findings suggest about the perceived separation between these two countries and their economies?

It makes that separation 鈥渁 little fuzzier,鈥� says Cadena.

鈥淥ne of the things we鈥檙e finding is how connected these two economies are. On the one hand, the stark differences in what someone can earn and what the labor market looks like in one country as opposed to the other suggests that we have made the separation between those countries real and meaningful. On the other hand, we are certainly not islands.鈥�

Realizing this, Cadena believes, could inform policymaking, specifically regarding immigration.

鈥淲hen we鈥檙e thinking about immigration policy鈥攚hen we鈥檙e thinking about all these things that affect the low-wage labor market鈥攚e are making policy that has a real and noticeable effect on the lives of people who are not even here,鈥� he says.

鈥淚鈥檓 not a politician, but I think that a more holistic sense of all the impacts of the choices we make as a country could help us make better choices.鈥�

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