David Escamilla-Guerrero on Self-selection of Mexican Emigrants in the presence of random shocks: Evidence from the Panic of 1907

On 10 October David Escamilla-Guerrero, PhD Candidate, London School of Economics and Political Science, will present on the evolution of self-selection patterns of Mexican emigrants.

Abstract: Self-selection of Mexican Emigrants in the presence of random shocks: Evidence from the Panic of 1907

Understanding the evolution of self-selection patterns of Mexican emigrants is particularly relevant considering the current position of the US Federal Government towards a more restrictive immigration policy. This has been manifested in declarations of the US President arguing that “When Mexico sends its people, they are not sending their best”. We use a novel dataset consisting on height (as a proxy to human capital) of immigrants, soldiers and passport holders to estimate the self-selection pattern of Mexican emigrants before 1910. We found strong evidence that immigrants might have belong to the upper tail of the height distribution of the Mexican working class, i.e. they were positively selected.

In addition, we exploit the Panic of 1907, the most severe financial crisis in the US before the Great Depression, to study self-selection in the presence of random shocks. The fact that the Panic of 1907 was a phenomenon confined to the US that severely affected industries where Mexican immigrants were mostly employed; and that the crisis occurred during a period when Mexicans could migrate to the US without restrictions, provides a unique opportunity to understand how idiosyncratic demand shocks might modify migrant self-selection patterns in a free mobility setting. The preliminary findings suggest that on average, individuals that emigrated during the panic were 0.5 centimeters shorter than their pre-panic counterparts, i.e. immigrants became less positively self-selected during this period. However, those who emigrated after the panic were, on average, 0.6 centimeters taller than pre-panic emigrants. We show that this shifts on selection patterns occurred because the crisis devalued significantly the observed and unobserved characteristics of the immigrants in the US and because the Mexican Government neutralized return migration costs through a repatriation program.

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