CAFTA AND MIGRATION: LESSONS FROM MICRO ECONOMY-WIDE MODELS AND THE NEW ECONOMICS OF LABOR MIGRATION

This article uses economy-wide modeling techniques to offer an intra-regional perspective on the impacts of trade reforms on rural economies and migration for five Central American countries (Costa Rica, El Salvador, Honduras, Guatemala, and Nicaragua) that are negotiating the Central American Free Trade Agreement (CAFTA) with the United States. Potential migration and welfare impacts of agricultural provisions in CAFTA depend on market integration, diversification of economic strategies, and government policies. Conclusions highlight the importance of product mixes, technologies, and labor markets in shaping outcomes of trade policy reforms.