The Effect of Immigration Enforcement Abroad on Immigrants' Home-Country Firms

Abstract

We use the largest modern US deportation program to investigate the effect of deportation shocks on establishments in the communities of origin of migrants. We link these deportations to Mexican municipalities by using transnational data on the undocumented migrant network and then merge them with rich establishment panel data, which includes formal and informal firms. Mexican regions experiencing larger deportation shocks observe an increase in their establishments’ size, revenue, and exports. We provide suggestive evidence that these changes are driven by increases in consumer demand, the transference of human and financial capital, and reductions in labor costs.

Keywords: D22, J61, O17, F16 Deportations, Return Migration, Firms, Secure Communities, Migrant Networks, Mexico

JEL Classification: D22, J61, O17