U.S. Immigration Enforcement and Mexican Labor Markets Thomas Pearson ∗ PhD Student Department of Economics Boston University Abstract This paper uses Secure Communities (SC), a policy which expanded local immigration enforcement, to study how increased immigration enforcement in the US affects Mexican labor markets. The variation in the application of SC across US states and in the destination patterns of comparably similar Mexican municipalities generates quasi-random variation in exposure to the policy. I show that in the short run, exposure to SC deportations increases return migration and decreases monthly incomes from working for less-educated men and women. SC deportations also increase net outflows within Mexico and emigration to the US, a potential mechanism for why earnings mostly rebound after five years. The negative short run effects do not appear to be driven by falls in remittance income or increases in crime as SC deportations increase the share of households receiving remittances and do not affect homicide rates. The results instead point to increased labor market competition as a result of deportee inflows. Lastly, I show that in municipalities with more banks and access to capital and where transportation and migration costs are lower, men's earnings are less responsive to the labor supply shock. Keywords: Return migration, deportations, labor markets JEL Codes: F22, O15, J40, R23 ∗270 Bay State Rd., Boston, MA 02215. Phone: 1-317-997-4495. Email:
[email protected] 1 Introduction Since Congress passed the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) in 1996, the US has deported a record number of unauthorized immigrants and other removable noncitizens (Rosenblum and Meissner 2014).