A Quick End to a Long Story: Networks and Mexican Migration during the Great Recession

AuthorRicardo Mora Téllez
DOI10.1177/0002716219856562
Published date01 July 2019
Date01 July 2019
/tmp/tmp-17Ae4uITzsjr91/input 856562ANN
THE ANNALS OF THE AMERICAN ACADEMYA Quick End to a Long Story
research-article2019
During times of economic recession, migrants face long
periods of unemployment or underemployment in des-
tination countries. This information is transmitted to
migrant-sending households via networks that link
communities of origin and destination, letting potential
migrants know that if they were to migrate they would
likely experience low and unstable earnings, and that
remittances normally expected from international
migration might be placed at risk. In this event, there
A Quick End to are few incentives for other household members to
migrate. This study examines the effect that informa-
a Long Story: tion sent through networks during recessionary times
has in reducing the likelihood of out-migration, thereby
explaining why Mexico-U.S. migration fell so suddenly
Networks and with the onset of the Great Recession in the United
States.
Mexican
Keywords: networks; migration; information; reces-
Migration
sion; risk
during the
Great Recession The theory of migrant networks developed by
Taylor (1986) in his article “Differential
Migration, Networks, Information and Risk”
argues that household income in rural Mexico
consists of money derived from four basic
sources: earnings contributed by household
members working in family enterprises, earnings
contributed by members working in local jobs,
By
earnings contributed by members working else-
RIcARDO MORA TÉLLEz
where in Mexico; and earnings contributed by
household members working abroad, which, in
the case of Mexico, is overwhelmingly the United
States. The economic problem for the house-
hold is to decide how best to allocate household
workers across these four productive activities.
Ricardo Mora Téllez is a postdoctoral fellow at Princeton
University’s Office of Population Research. He has
worked at Mexico’s National Council on Population on
the topic of international migration, and his most recent
publication appeared in 2017 in the journal Papeles de
Población.
correspondence: rmora@princeton.edu
DOI: 10.1177/0002716219856562
ANNALS, AAPSS, 684, July 2019 227

228
THE ANNALS OF THE AMERIcAN AcADEMY
At the time the decision-maker (household-head) formulates the household
labor assignment strategy, he does not know with certainty what the earnings
from each potential productive activity might be. Efficiency in assigning house-
hold members to labor force options depends on the quality of information
available to the decision-maker about the amount of money to be earned from
each activity, the variability of the resulting earnings, and the risks associated
with those earnings (Taylor 1986, 148). Whichever option maximizes expected
income while minimizing income variability and income risk will perforce maxi-
mize the utility the household expects to derive from that option and thereby
incentivize the household-head to invest the household’s labor resources in that
activity (Taylor 1986, 157).1
Given that migrant networks offer information about potential earnings avail-
able at destinations where household and community members migrate, access
to these networks reduces the risk to income earned at those places. Migrant
networks also offer information to help migrants find better-paying jobs at places
of destination, raising the amount of the expected income to be gained through
migration; and, since networks offer a structure of social support to help migrants
locate jobs with more reliable earnings, they also reduce the variability of income
from migration (Taylor 1986, 149). These considerations render the expected
utility derived from migration relatively attractive compared with other produc-
tive options, thus increasing the likelihood that the household will send one or
more members out to work as migrants, and, in doing so, reduce the risks to
income while maximizing the potential gains.
The research presented here applies Taylor’s social network theory to demon-
strate the influence that information from migrant networks has on the labor
allocations of households during times of recession. After introducing the prob-
lem, I apply his model to consider what happens when migrant networks connect
households to U.S. destinations experiencing an economic downturn. I focus on
the labor market circumstances that prevailed in the United States after the onset
of Great Recession in late 2007 and document the downward shift in the volume
of migration between Mexico and the United States that occurred after that date.
Using data from the Mexican Migration Project (MMP), I then undertake an
empirical analysis demonstrating the influence of networks on migratory deci-
sions taken before and after the onset of the Great Recession. I close by offering
a summary of conclusions and a discussion of their implications.
Network Effects during Recessionary Times
Taylor’s (1986) approach holds that household income (Y) comprises the sum
total of the earnings contributed by members engaged in four different kinds of
productive activities: work in a family business enterprise; work at a paying job in
the local community; work at a job located somewhere else in the same country;
and work abroad in another country. Each household-head has to decide how to
distribute its working members across these four activities, but the returns

A QUIck END TO A LONG STORY
229
expected from each activity are not known with certainty at the time that the
decision must be made.
For example, earnings derived from labor on a family farm are influenced by
variables outside the household’s control, such as droughts, floods, and plagues,
which affect crop productivity, as well as by changes in the price of farm inputs
and outputs related to shifting market conditions. The income derived from
wages earned from jobs in the community of origin likewise may vary with shifts
in the local labor market; and, finally, the earnings expected from migrants work-
ing elsewhere depends on conditions in national and international markets, as
well as on the ability of migrants to travel to different destinations, find a job,
remain employed, and evade detention and deportation by immigration authori-
ties if they are unauthorized. In addition, the amounts received by the sending
household depend on the propensity of migrants to remit and save; and all of
these eventualities are of course subject to stochastic shocks (Taylor 1986, 154).
Here, I seek to model the effect of migrant networks on the decision to
migrate during times of economic recession in countries of destination. Given
multiple sources of uncertainty, household-heads cannot maximize expected
earnings in the way normally assumed by traditional neoclassic economic models
of migration (such as that developed by Todaro [1969]). Instead, households
must take into consideration not only the income expected from different pro-
ductive activities, but also the stability and risks associated with each source of
income. They must then select the economic activity that offers the greatest gain
at the smallest risk with the least variability, just as investors seek to balance gains,
risks,...

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