Evolution of Remittances to CAPDR Countries and Mexico During the COVID-19 Pandemic

32 Pages Posted: 8 Jun 2022

See all articles by Aleksandra Babii

Aleksandra Babii

University of Toulouse 1 - Toulouse School of Economics (TSE)

Alina Carare

International Monetary Fund (IMF)

Dmitry Vasilyev

International Monetary Fund (IMF)

Yorbol Yakhshilikov

International Monetary Fund (IMF)

Date Written: May 1, 2022

Abstract

Traditional models relying on standard variables like the U.S. Hispanic unemployment rate fared well in explaining remittances to CAPDR and Mexico during the pre-pandemic period. However, they fail to predict the sustained growth in remittances since June 2020, including the significant increase in the average amount remitted. Using data from over 300 remittances corridors (from 23 U.S. states to 14 Salvadoran departments), we find that this increase is primarily explained by the dynamics of U.S. states real wages, as well as more temporary factors like U.S. unemployment relief (including the extraordinary pandemic support), U.S. states mobility, and COVID-19 infections at home. The paper also analyses what role the change in the modes of transmission of remittances, additional U.S. fiscal stimulus and U.S. labor market developments, especially in the sectors were CAPDR and Mexican migrants preponderantly work, play in explaining aggregate remittances growth.

Keywords: COVID-19 pandemic, migrant remittances, international migration, remittances dynamics, B. panel Vector Autoregression Model, remittances growth, evolution of remittance, remittances to CAPDR country, Remittances, Real wages, COVID-19, Migration, Unemployment, Central America

JEL Classification: F22, F24, O54, J30, I12, J64

Suggested Citation

Babii, Aleksandra and Carare, Alina and Vasilyev, Dmitry and Yakhshilikov, Yorbol, Evolution of Remittances to CAPDR Countries and Mexico During the COVID-19 Pandemic (May 1, 2022). IMF Working Paper No. 2022/092, Available at SSRN: https://ssrn.com/abstract=4125001

Aleksandra Babii (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Alina Carare

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Dmitry Vasilyev

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yorbol Yakhshilikov

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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