The Effect of Economic Integration on Demographic Transition:

Eeshani Kandpal, University of Illinois at Urbana-Champaign

Document Type Honors Project - Open Access

Abstract

This thesis uses household data from Mexico to test the hypothesis that, if economic integration increases the time-cost of producing children via increased female wages, then women will work more and have fewer children, reducing fertility rates. I measure the effects of such integration via trade liberalization, ignoring the other methods of market integration, i.e., migration and the maquiladora industry. Using Robertson’s (2000) result that labor markets along the Mexican border are better integrated with the US than is the Mexican interior, I employ a dummy for border city to estimate the effect of trade reform on women’s wages. Indeed, these dummy variables indicate that, relative to the interior, integration has increased women’s wages in Mexican border cities. Results show that female wages and education are negatively correlated to birthrates. This paper thus recommends holistic approaches to population control that employ not only direct measures, such as contraception, but also indirect methods, such as heightened emphasis on women’s education and generation of female employment.