Migrant Remittances During a Global Shock: Evidence From the COVID-19 Pandemic in Mexico

Christian Ambrosius; Raymundo M. Campos-Vázquez; Gerardo Esquivel

doi:10.2478/izajodm-2023-0002

Figures & Tables

Trends in key variables during the pandemic year 2020.Notes: Authors’ calculations. See Online Appendix 1 for a description of variables.

Remittances and employment situations in the US and Mexico (2020-Q2).Notes: Authors’ calculations. Data on employment levels in Mexico (left) is based on data on formal employees from the Mexican Institute for Social Security (IMSS). Exposure to unemployment in the US is calculated from a weighted portfolio of migrants from each of the 31 Mexican states (not including Mexico City) across their destination in the US (right).

Decrease in mobility relative to baseline (left axis) and decrease in electronic transactions relative to previous year (right axis) during 2020 (daily values, smoothed)See Online Appendix 1 for a description of variables.

Remittances and electronic payments_ Non-instrumented OLS

	Amount of electronic payments (log)
Level of remittances (log)	0.80^*** [0.17]	0.69^*** [0.14]	0.34^*** [0.06]	0.28^*** [0.06]	0.03^** [0.01]	0.01 [0.02]
Decrease in workplace mobility		0.72 [0.55]
Decrease in out-of-home events				0.44^*** [0.07]		0.29^*** [0.04]

Level of aggregation	state	state	municipal	municipal	municipal	municipal
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
R²	0.89	0.91	0.47	0.57	0.66	0.70
F-stat	116	106	167	144	562	299
No. of observations	62	62	772	772	1544	1544

Data description

Variable	Data Description	Level	Q1	Q2	Q3	Q4
Remittances	Inflow of total amount of remittances, in millions of USD.^a)	state	284.24 [248.65]	298.88 [258.78]	321.47 [258.48]	320.73 [272.49]
Remittances		municipal	15.48 [19.09]	16.26 [20.21]	17.68 [22.38]	17.49 [21.29]
MX employment levels	Number of formally employed persons registered with the Mexican Institute for Social Security IMSS, as a share of the adult population.^{b) c)}	state	0.23 [0.10]	0.22 [0.10]	0.22 [0.10]	0.22 [0.10]
MX employment levels		municipal	0.18 [0.16]	0.17 [0.15]	0.17 [0.15]	0.17 [0.15]
US unemployment exposure	Average exposure of migrants from each Mexican administrative entity i during quarter q using the weighting formula ∑k=1KUnempli,q⋆Dk,i \sum\limits_{k = 1}^K {{Unempl_{i,q}}\,{}^\star{D_{k,i}}} , where D denotes the share of diaspora from i in destination states k, and Unempl is the unemployment rate in destination state k. Data on migration corridors between Mexican municipalities of origin and US states of residence obtained from consular documents that register Mexican municipality of birth and US state of residence of all applicants.^{d) e)}	state	0.04 [0.00]	0.13 [0.01]	0.09 [0.01]	0.07 [0.00]
US unemployment exposure		municipal	0.04 [0.00]	0.13 [0.01]	0.09 [0.01]	0.07 [0.00]
Electronic payments	Total amount of electronic payments made via debit or credit card, geo-located at its point of sale. In millions of current Mexican Pesos.^f)	state	8845.12 [7268.58]	6737.49 [5437.24]	9170.64 [7452.55]	9656.16 [7660.82]
Electronic payments		municipal	675.79 [1541.01]	509.52 [1160.97]	651.06 [1480.99]	785.08 [1772.43]
Decrease in workplace mobility	Percentage drop in mobility between residence and workplace using location history from Google accounts on people's mobile devices, with respect to a median value for baseline days in the five-week period from January 3 to February 6, 2020.^g)	state	−0.04 [0.02]	−0.36 [0.06]	−0.26 [0.04]	−0.20 [0.03]
Migrants’ exposure to decrease in workplace mobility	Average exposure of migrants from each Mexican administrative entity i to the drop in workplace mobility in their US states of residence k, using the same weighting formula as for exposure to unemployment.^{g) d)}	state	−0.13 [0.00]	−0.36 [0.01]	−0.32 [0.00]	−0.27 [0.01]
Migrants’ exposure to decrease in workplace mobility		municipal	−0.13 [0.00]	−0.36 [0.01]	−0.32 [0.01]	−0.27 [0.01]
Decrease in out-of-home events	Drop in the number of out-of-home events of cell-phone users, relative to the baseline data (March 2). The indicator first calculates the daily median for out-of-home events of all cell phone users, and then calculates the median over quarterly periods. Data before March 1 is set to zero and the fourth quarter ends on November 30.^h)	municipal	0.00 [0.00]	−0.21 [0.17]	−0.28 [0.15]	−0.32 [0.15]
Financial development	Number of bank accounts (sight deposits or “depósitos a la vista”) relative to the adult population.ⁱ⁾	state	7.5 [10.6]	6.9 [9.4]	7.0 [9.5]	7.1 [9.5]
Financial development		municipal	11.9 [21.2]	10.7 [20.4]	10.7 [20.1]	10.6 [22.0]
Distance	Weighted average of direct distance in km from state capitals in Mexico to the state capital in the US state where migrants reside using the haversine formula. For exposure to unemployment, the average (weighted) distances between origin and destination is calculated depending on the distribution of migrants across the US.^{c) d)}	state	2016.13 [526.60]
Distance		municipal	2183.45 [589.86]

Elasticity of remittances with respect to mobility drops_ State-level regressions_

	Level of remittances (log)

	I	II	III	IV	V	VI	VII
Migrants exposure to decrease in workplace mobility	8.33^*** [2.19]		8.11^*** [2.10]	3.30^** [1.58]		3.28^* [1.63]	3.24 [2.35]
Decrease in workplace mobility		0.52^* [026]	0.48^* [0.27]		0.08 [0.24]	0.05 [0.26]	0.04 [0.28]

Level of aggregation	state	state	state	state	state	state	State
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
Interaction between weighted distance to diaspora and time	No	No	No	No	No	No	Yes
R²	0.35	0.26	0.40	0.50	0.49	0.50	0.52
No. of observations	62	62	62	124	124	124	124

Elasticity of remittances with respect to employment_ State-level regressions

	Level of remittances (log)

	I	II	III	IV	V	VI
US unemployment exposure (log)	−1.02^*** [0.20]	−1.00^*** [0.21]	−0.50^** [0.20]	−0.55^*** [0.21]	−0.55^*** [0.20]	−0.60^* [0.32]
MX employment (log)		0.19 [0.30]		−1.13^*** [0.26]	−0.73 [0.60]	−0.56 [0.59]

Level of aggregation	state	state	state	state	state	state
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
Interaction between weighted distance to diaspora and time	No	No	No	No	No	Yes
R²	0.43	0.44	0.51	0.55	0.56	0.58
No. of observations	62	62	124	124	120	120

Effect of remittances on the amount of electronic payments_ Two-stage least squares

	Amount of electronic payments (log)

	I	II	III	IV	V	VI
Amount of remittances (log)	1.2^*** [0.3]	1.3^*** [0.39]	0.73^*** [0.24]	0.70^*** [0.23]	0.5^** [0.2]	0.55^** [0.27]
Drop in workplace mobility (Google)		0.0038 [0.0078]
Drop in out-of-home events (GranData)				0.40^*** [0.12]		0.32^*** [0.067]
Financial development		−0.017 [0.12]		0.28 [0.42]		−0.29^* [0.16]

Level of aggregation	state	state	municipal	municipal	municipal	municipal
Weighted by diaspora size	no	no	no	no	no	yes
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
Weak instrument F-stat	12	12	66	67	16	28
# Observations	62	62	772	772	1544	1544

Elasticity of remittances with respect to mobility drops_ Municipality-level regressions_

	Level of remittances (log)

	I	II	III	IV	V	VI
Migrants exposure to decrease in workplace mobility	7.93^*** [1.16]		8.24^*** [1.16]	2.76^*** [0.87]	2.76^*** [0.87]	−0.47 [1.47]
Decrease in out-of-home events		0.09 [0.06]	0.12^* [0.06]		0.20^*** [0.07]	0.19^** [0.07]

Level of aggregation	municipal	municipal	municipal	municipal	municipal	municipal
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
Interaction between weighted distance to diaspora and time	No	No	No	No	No	Yes
R²	0.18	0.09	0.20	0.23	0.24	0.27
No. of observations	772	772	772	1544	1544	1544

Effect of remittances on the amount of electronic payments_ LIML estimation

	Amount of electronic payments (log)
Amount of remittances (log)	1.16^*** [0.21]	1.17^*** [0.21]	0.73^*** [0.17]	0.72^*** [0.16]	0.50^*** [0.17]	0.50^*** [0.167]
Decrease in workplace mobility		0.48 [0.51]
Decrease in out-of-home events				0.40^*** [0.08]		0.16^** [0.06]

Level of aggregation	state	state	municipal	municipal	municipal	municipal
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
Weak instrument F-stat LIML CI	12 [0.75, 1.56]	14 [0.76, 1.58]	66 [0.39, 1.06]	67 [0.41, 1.04]	16 [0.17, 0.83]	16 [0.18, 0.83]
No. of observations	62	62	772	772	1544	1544

Elasticity of remittances with respect to employment_ Municipal-level regressions

	Level of remittances (log)

	I	II	III	IV	V	VI
US unemployment exposure (log)	−0.98^*** [0.17]	−0.98^*** [0.17]	−0.58^*** [0.14]	−0.58^*** [0.14]	−0.58^** [0.25]	−0.52^** [0.17]
MX employment (log)		0.08 [0.16]		−0.02 [0.12]	−0.02 [0.12]	−0.10 [0.99]

Level of aggregation	municipal	municipal	municipal	municipal	municipal	municipal
Quarters covered	Q1, Q2	Q1, Q2	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4	Q1, Q2, Q3, Q4
Interaction between weighted distance to diaspora and time	No	No	No	No	Yes	No
Weighted by diaspora size	No	No	No	No	No	Yes
R²	0.21	0.22	0.24	0.24	0.27	0.22
No. of observations	770	770	1540	1540	1540	1540

Migrant Remittances During a Global Shock: Evidence From the COVID-19 Pandemic in Mexico

Figures & Tables

Figure 1

Figure 2

Online Appendix 2:

Remittances and electronic payments_ Non-instrumented OLS

Data description

Elasticity of remittances with respect to mobility drops_ State-level regressions_

Elasticity of remittances with respect to employment_ State-level regressions

Effect of remittances on the amount of electronic payments_ Two-stage least squares

Elasticity of remittances with respect to mobility drops_ Municipality-level regressions_

Effect of remittances on the amount of electronic payments_ LIML estimation

Elasticity of remittances with respect to employment_ Municipal-level regressions

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