Work in Progress

The objective of this paper is to provide a theoretical explanation to some puzzling facts. While among American residents women, Mexicans tend to have higher fertility rates - a total fertility rate (TFR) of about 2.7 as opposed to a TFR  of US born women of 2.0 - the fertility rate of Mexicans resident in Mexico is closer to the fertility rate in the US (natives) - 2.1.

Other three observations are also puzzling. First, Mexican born women who migrated to the US participate more to the labor force than Mexican stayers; second, the participation rate of immigrants relative to US or Mexican stayers decreases with education; third, the gap between the fertility rate of Mexican stayers and immigrants increases with education. In this paper I propose an explanation of these facts based on selection. One novelty of this explanation is that it explicitly takes into account the human capital composition within households. I model their decision to migrate together with decisions on fertility, investments in children's human capital and time allocation to market and household activities, where household activities are primarily intended to increase the human capital of children. Households are heterogeneous in terms of human capital pairs and human capital enters as input in the human capital accumulation function of their children. The fertility cost is also heterogenous within the household, as it is assumed that women face a fixed time cost per child additional to the time cost that both spouses face for rearing their children. Households who decide to migrate face a loss of human capital, as they cannot adapt their education completely to the foreign market, while they gain from migration in terms of higher returns to human capital for current and future generations. The model proposed predicts that fertility is an increasing function of men's human capital and decreasing of women's. It also predicts that, generally, more educated couples tend to migrate more than lower educated ones. However, because of the loss of human capital faced by both spouses upon migration, they are both relatively less productive in market activity, although equally productive in household activities. This, by reducing the opportunity cost, shifts the allocation of resources towards child rearing and fertility. This implies that immigrants women have higher fertility than natives in Mexico and the US, and, given the correlation between the education of spouses, why this gap increases by education. The incentive to migrate is stronger when women are more educated than men. That is, conditional on men's education, it is more likely that couples migrate the higher is the education of their spouse. This is because, among immigrants women specialize more on child rearing and, given that at high levels of education the main driver of migration is children's accumulation of human capital, the selection in terms of education for women is stronger. This prediction has clear empirical foundations, looking at the distribution of education among immigrants couples women tend to be more educated than men, especially at higher levels of education.