Defying Expectations, Remittances to Mexico Increase

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Dr. Jorge I. Dominguez has a background as a Harvard University professor focused on trade and policy spanning Latin America. As Antonio Madero Professor for the Study of Mexico, Dr. Jorge I. Dominguez had a particular depth of knowledge in the workings of the Mexican economy.

As reported in the Washington Post, one surprising outcome of the unfolding COVID-19 pandemic has been an increase in remittances to Mexico and countries such as Guatemala, Nicaragua, El Salvador, and Honduras.

Contrary to expectation, all of these countries saw greater remittance inflow from migrant workers and others with family ties to the region than in the first six months of 2019. An example is the more than $3.5 billion in remittances received by Mexicans in June, which represents an 11 percent year-over-year increase.

This is distinct from countries such as Brazil, Tajikistan, and the Philippines, where remittances have witnessed double digit declines. It does, however, mirror remittance surges in Pakistan and Bangladesh.

One initial theory was that immigrants might be wiring money back home in preparation for moves back to their native countries. This seems not to be the case, though, as reverse migration would have emerged as a trend by now.

Another theory is that numerous immigrants work in sectors that are considered essential, from construction to agriculture. However, the unemployment experienced by foreign-born Hispanics in recent months has been greater than that of the general population.

A third theory is that many of those who lost jobs received funds through a federal unemployment program that allowed them to continue to send money back home. In addition, the transfer uptick may reflect a recognition of migrants of the increasingly dire situation faced by family members in Mexico and Central America.

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