The effect of commercial policy on international migration flows: The case of the United States and Mexico

Microeconomic simulations are performed to determine the impact of liberalized commodity trade on Mexican immigrant supply to the United States. The results suggest that a removal of trade barriers will reduce migration flows, but that the reduction will be fairly modest. Specifically, if both countries move from the levels of protection characteristic of the mid-1960s to completely free trade, the ratio of real U.S.-Mexican wages falls by roughly 18 percent. Using an upper bound for the range of empirical estimates of the wage elasticity of immigrant supply, this implies a maximum reduction in migration flows of 35 percent. A unilateral elimination of trade barriers by the United States reduces Mexican immigrant supply by a maximum of 14 per cent.