Abstract

This chapter analyses the wage gap created by migration for graduates in Mexico, specifically looking at migration episodes before and after graduating from college and their subsequent influence on wages. The dataset used for the analysis is the Mexican Family Life Survey (MXFLS), a survey that collects information on all the permanent migration episodes of individuals from the age of twelve. The chapter describes the migration path over time for graduates by estimating three sequential stages of such a path: (i) migration choices before attending college; (ii) the likelihood of graduating from college; and (iii) an earnings equation representing returns to human capital. Results suggest that migration in Mexico creates a wage gap through the type of location to which the individual moved before college but not through migration episodes after college. Results highlight that the rural-to-urban migration in the search of better living conditions is the key driver of graduate migration in Mexico, but not the urban-to-urban or the urban-to-rural migration found in developed countries where individuals look for a return to the human capital they accumulated in college. Findings also show that the higher the heterogeneity of the migration path, the higher the wage premium. From a policy perspective, this result suggests that the focus should be on providing not just one but multiple opportunities for permanent migration across heterogeneous locations, especially for potential college students living in small cities or villages.