Remittances and their microeconomic impacts: evidence from Latin America

The flow of remittances to Latin American and Caribbean countries is the highest and fastest growing in the world, exceeding foreign direct investment and net official development assistance to the region. Remittances surpass tourism income and almost always exceed revenues from the largest export in these countries, accounting for at least 10 percent of gross domestic product in six of them. Furthermore, remittances are the least volatile source of foreign exchange in many of these economies, thus playing a crucial role in economic development. ; In what follows, I provide a general overview of the remitting patterns of migrants to the U.S. who are from Costa Rica, the Dominican Republic, Haiti, Mexico, Nicaragua, and Peru. Subsequently, I summarize some microeconomic evidence of the impact that remittances have on various spheres of economic development, as is the case with employment, business ownership, education, and health care investments in two LAC economies. These findings underscore the importance of remittances as a resource for the accumulation of human capital investments in education and health and as a determinant of employment patterns in remittance-receiving households in developing economies.Emigration and immigration ; Economic development ; Developing countries ; Emigrant remittances

Marriage Markets and Married Women’s Labor Force Participation

Based on a model that views men and women as participants in competitive markets for women’s home production time, we predict that the scarcer women are relative to men, the less married women are likely to participate in the labor force. The magnitude of this effect is expected to depend on married women’s educational attainment. We use time series for four U.S. regions to test our prediction. As hypothesized, we find that an increase in the growth rate of the sex ratio results in a decline in the labor force participation growth rate of married women. However, the sex ratio effect is attenuated the greater the growth rate in college-educated wives.

Moonlighting over the Business Cycle

Using data from the 1979 National Longitudinal Survey of Youth, we examine the cyclicality of moonlighting by gender. We estimate a random effects Tobit model of moonlighting among working men and women and find that, while male moonlighting behavior does not fluctuate significantly with the business cycle, female moonlighting does. The cyclicality of female moonlighting has, nonetheless, varied over the course of the past 35 years. Female moonlighting seemed to behave counter-cyclically during much of the 1980s and early 1990s, confirming the popular media belief that moonlighting is more likely to occur during periods of economic distress. Yet, this counter-cyclical behavior disappears during the 1993-99 period to become pro-cyclical by the early twentieth century. The recent pro-cyclicality of female moonlighting supports the idea that female workers respond to a need for “just-in-time” employment following the economic upturn of the mid to late 1990s.

Access to Banking Services and Money Transfers by Mexican Immigrants

Increased access to the U.S. financial system through banks’ recognition of the ‘matrícula consular’ identification card may encourage Mexican immigrants to save and transfer more money home. Using data from the Mexican Migration Project, we examine whether immigrants with bank accounts in the U.S. between 1970 and 2002 sent more funds to Mexico than their unbanked counterparts. While having a U.S. bank account does not raise monthly remittances by Mexican immigrants, it boosts the amount brought back home by more than $6000 per trip. These findings suggest that increased usage of banks by immigrants may enhance future flows of funds to Mexico.

The good and the bad in remittance flows

Remittances have risen spectacularly in recent decades, capturing the attention of researchers and policymakers and spurring debate on their pros and cons. Remittances can improve the well-being of family members left behind and boost the economies of receiving countries. They can also create a culture of dependency in the receiving country, lowering labor force participation, promoting conspicuous consumption, and slowing economic growth. A better understanding of their impacts is needed in order to formulate specific policy measures that will enable developing economies to get the greatest benefit from these monetary inflows

Remittances and their Response to Portfolio Variables

Using a recent Spanish database on immigrants from all across the globe, we show that remittances respond to differences in macroeconomic conditions at home and abroad. This behavior suggests that immigrants are sophisticated economic optimizers who take advantage of differential returns when accumulating assets. Immigrants remit more when per capita GDP growth rates at home are greater than in Spain, when the home-host real interest-rate differential increases, and when real exchange-rate uncertainty is higher. These patterns differ with ownership of home country assets and with the area of the globe from which immigrants originate, whether it is Africa, the Americas, Europe or Asia. The response of remittances to cross-country differences in portfolio variables suggests that remittances may not be counter-cyclical as often claimed. Hence, paradoxically, while remittances may promote consumption-smoothing at the individual or household level, remittances cannot be relied upon to shore up migrant-sending economies in times of need.

The Impact of Amnesty on Labor Market Outcomes: A Panel Study Using the Legalized Population Survey

This paper tests whether amnesty, a provision of the 1986 Immigration Reform and Control Act (IRCA), affected the labor market outcomes of the legalized population. Using the Legalized Population Survey (LPS) and the National Longitudinal Survey of Youth (NLSY79) from 1987-1992, a quasi-experimental framework is developed to assess the differential impact of amnesty on the legalized population relative to a comparison group. After the implementation of the amnesty program, employment fell and unemployment rose for newly legalized men relative to the comparison group of already legal U.S. residents. For women, employment also fell and transitions out of the workforce increased among the newly legalized population. Increasing returns to skill, as captured by English proficiency, only played an important role in explaining the employment of newly legalized women. Finally, newly legalized men and women enjoyed higher wage growth rates than their working native counterparts, perhaps owing to their comparatively growing returns to U.S. educational attainment over this period.amnesty, legalization, labor market, Legalized Population Survey

Remittances and the Macroeconomy: The Case of Small Island Developing States

In this paper we examine how remittances relate to the exchange rate, natural disasters and foreign aid in developing economies. By using panel VAR methods we are able to compensate for both data limitations and endogeneity among variables. We find that while foreign aid tends to appreciate the real exchange rate, remittances do not have the same impact. We also detect an inverse relationship between the real exchange rate and remittance amounts, with real exchange rate depreciation increasing remittance inflows. Of particular interest is the observation that the Small Island Developing States (SIDS) subsample of countries behave differently from the full sample of Developing Countries (DC) in a number of ways. Of note is the differing impact of disaster shocks on the real exchange rate and on the level of remittances across the two samples.

President Obama’s executive order granting temporary reprieve from deportation to millions of undocumented immigrants will reopen the immigration debate

On Thursday night, in an address to the nation, President Obama announced that his administration would use its ‘prosecutorial discretion’ to grant a reprieve from deportation to undocumented immigrants who have been in the country for at least 5 years, have children who are citizens or permanent residents, and are willing to pay taxes. Catalina Amuedo-Dorantes writes that this action is similar to 2012’s Deferred Action for Childhood Arrivals memorandum in that it does not prevent the recently arrived from being deported, provide a path to citizenship or allow undocumented immigrants access to benefits. She writes that the measure will help undocumented immigrants by allowing many families to live in peace and without the constant fear of deportation, which may in turn allow them to contribute to the social and economic fabric of the U.S

New Evidence on the Role of Remittances on Health Care Expenditures by Mexican Households

Using Mexico's 2002 wave of the Encuesta Nacional de Ingresos y Gastos de los Hogares (ENIGH), we find that international remittances raise health care expenditures. Approximately 6 pesos of every 100 peso increment in remittance income are spent on health. The sensitivity of health care expenditures to variations in the level of international remittances is almost three times greater than its responsiveness to changes in other sources of household income. Furthermore, health care expenditures are less responsive to remittance income among lower-income households. Since the lower responsiveness may be partially due to participation of lower-income households in public programs like PROGRESA (now called Oportunidades), we also analyze the impact of remittances by health care coverage. As expected, we find that households with some kind of health care coverage – either through their jobs or via participation in PROGRESA – spend less of remittance income increments on health care than households lacking any health care coverage. Hence, remittances may help equalize health care expenditures across households with and without health care coverage.remittances, health care, household expenditures, Mexico