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A service for global professionals · Sunday, August 19, 2018 · 459,113,428 Articles · 3+ Million Readers

How Do Migration and Remittances Affect Inequality? A Case Study of Mexico

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

The poverty-reducing effects of remittances have been well-documented, however, their effects on inequality are less clear. This paper examines the impact of remittances on inequality in Mexico using household-level information on the receiving side. It hopes to speak to their insurance role by examining how remittances are affected by domestic and external crises: the 1994 Mexican Peso crisis and the Global Financial Crisis. We find that remittances lower inequality, and that they become more pro-poor over time as migration opportunities become more widespread. This also strengthens their insurance effects, mitigating some of the negative impact of shocks on the poorest.

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