Date of Award

Spring 1-1-2011

Document Type


Degree Name

Master of Arts (MA)



First Advisor

Fernando Riosmena

Second Advisor

Elisabeth Root

Third Advisor

Richard Rogers


The following thesis examines the relationship between migration and informality in Mexico. Since the 1980's migration has become increasingly important to the Mexican economy, as the flow of remittances alone add 26 billion dollars per year to the Mexican economy (World Bank 2006). Similarly, the informal sector has become more important, as an estimated 62% of Mexicans work in the informal sector (Arias et al. 2010). Despite the prevalence of both little is known about their interaction. This thesis attempts to ameliorate that gap by specifically examining migration and the formation of formal versus informal businesses. The household data come from the Mexican Migration Project, while the community level data come from the Mexican census. Multilevel modeling techniques (random effects) were used because of the previous literatures suggested influence of community level factors (Lindstrom 1996). Additionally, multinomial or multi-risk models were run to see which factors predicted involvement in each respective sector. Community level factors seemed to be more important for informal businesses, while previous capital attainment and socio-economic status were more important for formal businesses. The results indicate that through migration Mexico saw a proliferation of informality, as households used migration to overcome capital constraints. In addition, this research indicates that migration does not seem to attenuate inequality through business formation. Future research needs to be completed on the influence of these informal businesses on broader, community level development.