Implications of U.S. Immigration Policies for North American Economies
By: Devadoss, Stephen; Zhao, Xin; Luckstead, Jeff
Devadoss, Stephen; Zhao, Xin; Luckstead, Jeff, Implications of U.S. Immigration Policies for North American Economies, Journal of Agricultural and Resource Economics, Volume 45, Issue 1, January 2020, Pages 161-178
We develop a four-sector (labor-intensive agriculture, capital-intensive agriculture, service & construction, and manufacturing) general-equilibrium model of North American countries to analyze the effects of tighter U.S. immigration policies. Results show that these policies erode the comparative advantage of U.S. labor-intensive agriculture, causing U.S. production and exports to fall and other countries to expand their exports to the United States. In Mexico, low-skilled labor demand in labor-intensive agriculture increases as production rises. The effectiveness of U.S. tighter immigration policies depends on the substitutability between U.S. domestic and undocumented workers. Immigration policies exacerbate the wedge between Mexican low-skilled wage rate and the undocumented wage rate, intensifying the underlying cause for unauthorized entry.