This study uses two household surveys from Mexico to examine the relationship between wealth and migration, and the impact of international migration on inequality. To control for endogeneity, the authors use an instrumental variables approach focusing on historical migration rates. Results suggest that international migrants come from the middle of the wealth distribution. With respect to inequality, the authors find that in communities with low levels of migration the initial effect of international migration is to increase inequality.  However, as levels of migration increase, international migration tends to reduce inequality. In high-migration communities the benefits of international migration reach lower-income groups, thereby reducing inequality.

©2007 Elsevier