Social Capital and the Wages of Mexican Migrants: New Hypotheses and Tests

Abstract

In this article, we develop hypotheses about the ways in which network ties influence wages and the circumstances under which social capital assumes greater or lesser importance in the determination of migrant earnings. We then test these hypotheses using data on male Mexican migrants gathered by the Mexican Migration Project. We find that social capital has both direct and indirect effects on migrant wages. Indirectly, social capital influences how a job is obtained and whether it is in the formal sector. Directly, having friends and relatives with migratory experience improves the efficiency and effectiveness of the job search to yield higher wages. Moreover, the effects of social capital on wages are greater for undocumented than documented migrants, reflecting the more tenuous labor market position of the former. These results confirm and extend social capital theory and underscore the importance of social networks in understanding the determination of migrant earnings.