Dario Diodato*

The impact of return migration on employment and wages in Mexican cities

(Authors: Dario Diodato, Ricardo Hausmann, Frank Neffke)

Abstract: How do return migrants from the US to Mexico affect local workers? Return migrants increase the local labor supply, potentially hurting local workers. However, having been exposed to the technologically advanced US economy, they may also carry human capital that benefits non-migrants. Using an instrument based on involuntary return migration, we find that, whereas workers who share returnees’ occupations experience a fall in wages, workers in other occupations see their wages rise. These effects are, however, transitory and restricted to the city-industry receiving the returnees. In contrast, returnees permanently alter a city’s long-run industrial composition, by raising employment levels in the local industries that hire them. 

*Dario Diodato is an Economist for the Joint Research Centre of the European Commission. Previously, between 2017 and 2019, he was a postdoctoral research fellow at Harvard University (Growth Lab, Center for International Development). Before his PhD in Economic Geography at Utrecht University (2013-2017), he worked as a researcher in urban and regional economics for the PBL Netherlands Environmental Assessment Agency (2009-2012). His research spans across several topics, including technological change, structural transformation, migration, cities and regions, economic complexity, economic resilience, human capital and skills.