Pains, guns and moves: The effect of the US opioid epidemic on Mexican migration

In this paper, we study how a positive economic shock to an illicit industry might foster migration. In 2010, a series of reforms to the U.S. health care system resulted in a shift in demand from legal opiates to heroin. This demand shock had considerable effects on Mexico, the main supplier of heroin consumed in the United States. We exploit variation in potential opium production at the municipal level in a difference-in-differences (DID) framework, which compares Mexican municipalities with different amounts of opium-suitable land before and after 2010. We find that people fled out of municipalities more suitable for opium production, many to areas close to the U.S. border and into the United States. This is due to the increase in violence and conflicts, as municipalities more suitable for opium became highly valuable to drug cartels. Overall, almost 95,000 people migrate within Mexico and 22,000 emigrate to the United States.