The Economics of Migration and Migration Policy in Rural Mexico ∗

Migration decisions of households in rural Mexico are both economically significant and relevant for policy. We discuss the economics of migration and migration policy, including the determinants of migration, neighborhood effects, and dynamic behavior, and survey the related literature. We then describe and review our recent empirical work analyzing the economics of migration and the effects of migration policy on migration decisions and welfare in rural Mexico. In this recent study, we find that, owing in part to neighborhood effects and dynamic behavior, a cap on total migration to the US decreases migration not only to the US but also within Mexico as well, causes migration to the US to decrease by more than what is required by the policy, and decreases average welfare per household-year. We discuss the implications of our recent study for contemporary economic policy and migration policy. JEL Codes: O15, O54