Foreign Net Discount Rates: The Case of Undocumented Mexican Workers

While undocumented immigrants have standing to sue in state and federal courts in the United States, the number of legal cases dealing with the question of measuring damages awards is limited. Although the approaches taken by courts differ widely, a common past approach has involved foreclosing damages recovery to undocumented workers. Some courts, however, have allowed damages awards based on wages in the undocumented worker's country of origin. As the issue of how to correctly estimate damages of undocumented workers arises going forward, it is reasonable to expect that forensic economists will be required to estimate damages awards based on foreign wages. As an effort to equip forensic economists with the tools to conduct such estimates, this paper addresses the issue for the case of Mexican undocumented workers. First, the paper reviews developing case law on the subject. Second, based on official sources, time series data on interest rates and Mexican annual wages by industry since 1980 are investigated and reported. Third, the historical net discount rate (NDR) is discussed and proposed as a methodology to estimate damage awards. Fourth, NDR stability is discussed. The paper concludes by summarizing the findings and offering concluding comments.