Transcript Document
Remittances to Mexico:
Recent Trends
Jesus Cañas
Federal Reserve Bank of Dallas
Financial Education & Economic Inclusion The Immigrant Experience
Hosted by
Federal Reserve Bank of Dallas
The Consulate General of Mexico in Dallas
Financial Fitness Greater Dallas
Disclaimer: The views expressed herein are those of the presenter; they do not necessarily reflect the views of the Federal
Reserve Bank of Dallas or the Federal Reserve System.
Outline
• Recent trends in remittances
• Great recession/Housing bust
• Effects of remittances
• In general
• our paper
• Summary
Remittances flat since 2009
Millions of dollars
real, s.a.
3000
2500
2000
1500
1000
500
Remittances are mostly sent electronically
97.4
100.0
90.0
80.0
Electronic transfers
70.0
60.0
51.5
Avg. transaction
amount in 2012:
$312
50.0
40.0
39.7
money orders
30.0
20.0
Cash and kind
10.0
8.1
0.9
1.7
0.0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Remittances are more relevant
to high migration states
Share of state
GDP in 2012
%
Michoacan
Oaxaca
Guerrero
Zacatecas
Nayarit
Guanajuato
Morelos
Tlaxcala
Hidalgo
Puebla
8.2
7.8
7.7
6.0
5.2
4.9
4.7
4.4
4.1
3.7
1
2
3
4
5
6
7
8
9
10
5
Sectorial distribution of Mexican immigrant
male workers In the U.S.
2012
Agriculture, Fishing, Forestry
Construction
Manufacturing
Services
Trade, Transportation, Utilities
Information
FIRE
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
% Share
4.9
17.0
14.4
63.1
15.0
0.4
2.3
12.5
8.1
17.2
6.4
2007
Agriculture, Fishing, Forestry
Construction
Manufacturing
Services
Trade, Transportation, Utilities
Information
FIRE
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
% Share
4.2
24.9
15.5
55.1
14.4
0.5
2.2
10.1
6.6
14.5
5.9
Source: March 2012 Current Population Survey
Source: March 2007 Current Population Survey
NOTE: the denominator is total Mexican immigrant
male workers in the U.S.
NOTE: the denominator is total Mexican immigrant
male workers in the U.S.
Remittances quite responsive to
construction employment growth
%
%
40
30
40
Remittances
yoy% 5mma
30
20
20
10
10
0
0
-10
-20
service employment
yoy%, 5mma
-10
Construction employment
yoy%, 5mma
-20
-30
-30
-40
-40
Effects of Remittances
• On recipient households
•
Increase income and consumption
•
Reduce poverty but maybe also labor supply
• Increase investment (for credit constrained hh)
• Human, physical capital; self-employment
• On the greater economy/labor force
• Aggregate demand shifts out, economy should
grow and prices, wages and employment rise
• Income, wage inequality may worsen
Do Remittances Boost Economic Development?
Evidence from Mexican States
Joint work with Pia Orrenius, Madeline Zavodny, & Roberto Coronado
• How do remittances affect economic
development in the home country?
• Labor markets
• Wage distribution
• School enrollment
• This study’s contribution
• Exploit variation in panel of Mexican states
Do Remittances Boost Economic Development?
Evidence from Mexican States
Joint work with Pia Orrenius, Madeline Zavodny, & Roberto Coronado
• Results suggest remittances lead to
• Declines in employment and unemployment
• Increased wages
• Improvements in the wage distribution
• Fraction of lowest-paid falls, fraction of workers
in the middle rises
• Future work
• Explore differences in formal, informal labor
market effects
Summary
• Not yet at pre recession levels
• Highly dependent on the construction sector
• More relevant to high migration states
• Important because they can raise incomes and
reduce poverty rates
Top ten receptors of remittances in 2012
(billions of US dollars)
1
2
3
4
5
6
7
8
9
10
Michoacan
Guanajuato
Jalisco
Estado de Mexico
Puebla
Oaxaca
Guerrero
Veracruz
Distrito Federal
San Luis Potosi
2,209
2,139
1,885
1,564
1,404
1,366
1,231
1,176
1,014
739
Average transaction amount in 2012: $312
Graphical correlation between remittances
and US employment growth
%
60
60
50
50
40
40
30
Remittances
yoy% 5mma
30
20
20
10
10
0
0
-10
Manufacturing employment
yoy%, 5mma
%
-10
-20
-20
-30
-30
-40
-40
Remittances
• tend to increase with
• migrants’ earnings
• education
• family ties and probability of return
• tend to decrease with
•
migrants’ length of stay in the host country
Participation of Mexican immigrant
workers In U.S. labor force
2012
Agriculture, Fishing, Forestry
Construction
Manufacturing
Services
Trade, Transportation, Utilities
Information
FIRE
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
% Share
18.8
12.7
6.9
3.8
3.8
1.1
1.9
5.4
1.9
8.6
6.4
2007
% Share
Agriculture, Fishing, Forestry (Primarios)15.3
Construction
14.7
Manufacturing
6.8
Services
3.5
Trade, Transportation, Utilities
3.6
Information
1.0
FIRE
1.6
Professional & Business Services
4.8
Education & Health Services
1.5
Leisure & Hospitality
8.1
Other Services
6.2
Source: March 2012 Current Population Survey
Source: March 2007 Current Population Survey
NOTE: the denominator is total U.S. labor force
NOTE: the denominator is total U.S. labor force