Wednesday, May 27, 2015

Immigration Article of the Day: The Bracero Program and Entrepreneurial Investment in Mexico by Edward Kosack

The Bracero Program and Entrepreneurial Investment in Mexico by Edward Kosack, University of Colorado Boulder, Department of Economics April 1, 2015 Abstract: The Bracero Program was a massive guest worker program that allowed over four million Mexican workers to migrate legally and work temporarily in the United States from 1942 to 1964. This paper examines the development impacts of the program, especially its effect on individual investments. Exploiting microdata and within person variation in migration choices, I estimate an individual fixed effects model to obtain the effect of bracero migration on the individual’s decision to start a new business. Results indicate that individuals migrating as braceros were more likely to start new businesses, and that bracero trips were more likely to result in business investment than were illegal trips. Several alternative explanations are systematically eliminated. Survival analysis is used to further explore the timing of business investment and how that was related to migration. Hazard models suggest that bracero migration was associated with a greater hazard of investment. These models also suggest that illegal migration was less successful in encouraging immediate entrepreneurial activity. This provides strong evidence that the Bracero Program increased economic growth and development by spurring new investment and that this boost was greater than for other migration options at the time.


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