Labor Demand and Unauthorized Immigration: The Case of the United States from 1980 to 2012

Abstract

This paper attempts to verify the main drivers of unauthorized immigration from Mexico to the U.S. from 1980 to 2012 and draw policy implications for U.S. immigration reform. To this end, it starts by establishing a theoretical framework for analysis drawing on basic tenets of two theories of international migration– segmented labor market theory and neoclassical economic theory. It then engages in empirical analysis using annual data from 1980 to 2012 and determines factors with statistical significance. It employs data representing real wages in the two countries, immigration enforcement level in the U.S., and the demand for labor in the U.S. It also includes dummy variables signaling key developments in U.S. immigration policy during the research period. It then infers policy implications based on the empirical results and concludes by making remarks on the pending immigration reform.

This paper finds that the demand for labor in the U.S. is a strong magnet for unauthorized migration from Mexico. It concludes that a viable immigration policy must include a flexible admission system that responds to changing labor demands and a balanced enforcement system which regulates the border as well as the employers of unauthorized immigrants.