Return Migration and Inequality, Poverty, and Income

In 2007, for the first time since the Great Depression, more migrants returned to Mexico than those that migrated to the United States. We exploit this sharp flow reversal to examine whether return migration has played a role in reducing inequality and poverty while increasing income. We assemble a two-period panel for all municipalities in Mexico and instrument for return migration using the exogenous variation of immigration enforcement policies at the state level in the United States. We find that return migration reduces inequality and poverty and increases income per capita. The effects are strongest in poorer, marginalized rural municipalities