Exchange Rates and U.S. Direct Investment into Latin America

This paper analyzes the impact of exchange rate levels and exchange rate uncertainty on U.S. foreign direct investment into Latin America. By decomposing exchange rate uncertainty into temporary (short-run) and permanent (long-run) components, we further explore whether the nature of uncertainty matters. Our empirical findings support the view that exchange rate uncertainty has a negative impact on U.S. investment flows into Latin America. Moreover, it is the persistency in uncertainty rather than transitory uncertainty that mostly deters foreign investment. In contrast, investors do not appear to be affected by discrete movements in exchange rate levels.

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

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.

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.

Remittances and Income Smoothing

Due to inadequate savings and binding borrowing constraints, income volatility can make households in developing countries particularly susceptible to economic hardship. We examine the role of remittances in either alleviating or increasing household income volatility using Mexican household level data over the 2000 through 2008 period. We correct for reverse causality and endogeneity and find that while income smoothing does not appear to be the main motive for sending remittances in a non-negligible share of households, remittances do indeed smooth household income on average. Other variables surrounding income volatility are also considered and evaluated.income smoothing, remittances

Women and men with international experience earn 5 and 2.5 percent more than their U.S.-born counterparts with none

The rise of globalization in recent decades has meant the increasing flow of capital, both financial and human. But does this increased human mobility have benefits for workers? In a new study, Susan Pozo investigates how international experience can benefit workers’ wages. By examining the U.S. population that was born in other countries to parents with U.S. citizenship, i.e. those who gained, but did not seek, international experience she finds that wages for this group are 5 percent higher for women and 2.5 percent higher for men

Essays on Legal and Illegal Immigration

Immigration is an issue drawing increased attention among policymakers and citizens. These essays provide an economic perspective to the effects of immigration on the labor markets in the United States.https://research.upjohn.org/up_press/1209/thumbnail.jp

Immigrants and Their International Money Flows

This book consists of a series of studies on the topic of international migration with an emphasis on workers\u27 remittances. Chapters cover the impact of remittances on economic development and the interplay of immigration policies with human capital acquisition and labor markets in out-migration areas.https://research.upjohn.org/up_press/1167/thumbnail.jp