Implications of a North American Free Trade Agreement for Mexican Migration into the United States

Abstract

In the short-to-medium run, a North American Free Trade Agreement (NAFTA) is likely to increase pressures for undocumented migration from Mexico to the United States. But given that NAFTA (if approved) will be phased-in over a 15-year period, the migration effect need not be sudden or overwhelming. In the long run, however, if free trade brings about an improvement in the Mexican economy relative to the US economy, the incentives for undocumented migration are likely to weaken. The authors calculate estimates of the undocumented gross annual migration flow by stipulating various degrees of changes in the relative level of unemployment and of wage rates between the United States and Mexico. These estimates show that narrowing the wide economic differentials between the two countries could substantially reduce the undocumented flow.