over the period 1990-2019. At the same time, labor demand related to integration in global trade networks is geographically concentrated in the North, close to the U.S. border.

**Figure 1: Goods and services exports and imports in Mexico, 1990-2018**

<!-- Start of picture text --> Exports Imports<br>45 600 45 600<br>40 40<br>500<br>35 35<br>30 400 30 400<br>25 25<br>300<br>20 20<br>15 200 15 200<br>10 10<br>100<br>5 5<br>0 0 0 0<br>Exports (% of GDP) Exports (billions 2015 usd) Imports (% of GDP) Imports (billions of 2015 usd)<br>1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018<br><!-- End of picture text --> Source: Own calculations based on World Development Indicators.

This paper contributes to the literature in several ways. First, it provides a comprehensive framework and new insights into the underlying channels through which trade affects labor markets and broader development, distinguishing between the employment, labor income, migration and informality channels. Our study finds that expanding exports per worker in Mexico’s municipalities increased labor force participation, but not employment rates. Exports also raised total labor incomes, but not average labor incomes, implying a growing labor supply. In contrast, we find no effect of growing imports per worker through the employment and income channels. We therefore test whether growing labor supply through inward migration and movements from the informal to the formal labor market dilute the impact of trade through the employment and income channels.

Our findings suggest that both export and import expansion per worker increased immigration to Mexican municipalities, driven by domestic rather than international unskilled migration. These findings support the hypothesis that the lack of positive labor market impacts of trade integration may be partly explained by migration (Robertson 2007) and complement the results by Majlesi and Narciso (2018) who find that Mexican municipalities that are more strongly exposed to Chinese import competition experience higher emigration to other municipalities, but less emigration to the United States. We also find that higher exports and imports per worker decreased the rate of informal workers, confirming studies for South Asian countries that find declines in informality, but no increases in employment due to export expansion (Artuc et al. 2019, Robertson et al. 2020).

Second, it contributes to the number of studies assessing the impact of trade on labor markets for Mexico specifically. Lederman, Maloney, and Servén (2005) argue that NAFTA had positive impacts on foreign direct investment (FDI), trade, and productivity in Mexico, but only modest impacts on wages. Industry-level evidence points to a small but positive impact of FDI on manufacturing employment (Waldkirch et al. 2009). Firm or plant level studies find a connection between trade and increased wage inequality (Frías et al. 2012; Verhoogen 2008). Other studies on Mexico focused on the links between globalization and labor markets at the regional level. Chiquiar (2008) finds that regions exposed to NAFTA show an increase in wage levels, but a decrease in the skill premium. Airola (2008) finds that the wage skill premium is negatively related to Maquiladora employment (used as a proxy for FDI). The latter findings are consistent with the Stolper-Samuelson theorem of the Heckscher-Ohlin model, suggesting that factor prices of factors used more intensively in production increase, which in Mexico’s case is lower2