Economics: Remittances show historical increases during the economic crisis
Since the outset of the current pandemic, Mexicans working abroad have been casting a substantial lifeline not only to their loved ones back home, but also to Mexicans as a whole. Defying all expectations, the remittance stream to Mexican households experienced an historical spike even as Covid-19 cast its pall over North American economies, with immigrant workers often among the most vulnerable members of the workforce. After the March results proved to be the exact opposite of what analysts and multilateral institutions alike had been predicting, many insisted it was a one-off experience that would quickly be reversed. But the amazingly resilient, pandemic-defying remittance flows have continued to outperform those of 2019 as recently as August, the most recent month for which we have data.
Remittances have easily eclipsed FDI and the key service sectors that are among Mexico’s main foreign currency sources. But an ebbing of remittance flows would spell much greater hardship for millions of Mexicans. According to a CEMLA survey, remittances are the main source of income for 28.5% of recipient households and a very important income source for another 32% of such families, numbers that underscore the importance that the ongoing expansion of such inflows have had in a situation as critical as the current one. Their rise has allowed poverty-stricken households receiving such transfers to avoid a greater degree of precariousness amid heightened levels of unemployment and especially underemployment, something all the more essential in the absence of effective counter-cyclical policies in Mexico.
Presumably we will develop a fuller understanding of this turn of events once the full economic data for 2020 becomes available next year, but some explanations already appear clear. Although the Mexican immigrant population tends to have lower incomes than other major migrant groups, most hold US work permits or citizenship, meaning that both they and the large segment of 14 million second-generation Mexican immigrants that are also remittance generators would have tended to benefit from unemployment insurance and government pandemic relief programs. Others have a higher human capital level and have been working in relatively stable industries that would have allowed them to accumulate savings in past years. And undocumented migrants who lost their jobs in March and April appear to have quickly moved into higher-risk and lower paying jobs while keeping constant or even increasing the amount sent to their relatives.
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