Wednesday, September 12, 2007

Remittance slowdown in Mexico

The Migration Policy Institute just released a fact sheet on the slowdown of remittances to Mexico. Of particular interest is the breakdown by state, which shows that some states have seen a 5% increase or greater (still much smaller than the national 19.1% growth between 2003 and 2006) while others have dropped more than 5%. Further, some states are more highly dependent on remittances than others.

A major issue, then, is the economic and social (and perhaps ultimately political) impact in those states with decreased remittances and high dependence (e.g. Michoacán). If families are hurt more economically, one response would be to migrate, but the decrease of remittances itself may constitute a disincentive, since it is a potential sign of fewer opportunities in the U.S. It may spur internal migration or, perhaps, greater political opposition. On the flip side, states that see an increase in remittances but are not dependent on them will get an economic boost (e.g. Baja California del Sur, though the absolute number there is the lowest in the country).

I think this type of subnational view is really useful, as the aggregate numbers can hide a lot of what’s going on in different parts of the country.

3 comments:

Miguel Centellas 9:10 AM  

I agree that disaggregated data is always helpful.

But I suggest an alternate hypothesis for the reduction in remittances: Could they be due to "generational" (or "immigrant wave") differences? Is it possible that remittance-sending declines the longer one is in the US? Here we'd have to disaggregate to the individual level, to see if someone w/ 20 years in the US sends back (on average) less money than someone w/ 5 years in the US.

Miguel Centellas 9:12 AM  

My hypothesis is based on personal experience. My parents didn't send much back the first 1-2 years (because we didn't have money to send back), but then began to send money back to my abuelitos (grandparents) and some other relatives in Bolivia. But since most of the money when to my abuelitos, those remittances ended (logically enough) when they died. I wonder if that kind of dynamic is more common.

Greg Weeks 7:51 AM  

It is empirically true that remittance sending declines with time--about 5 years and then it goes down, which tends to coincide with the decision to remain in the U.S. The Pew studies have data on that.

That hypothesis could hold if, because of enforcement in the past year, there are fewer recent immigrants in the U.S.

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