Remittance Flows from the US to Mexico at the State Level: Drivers and Trends

Hector Archundia / Flickr / CC0 1.0

While Mexican emigration has been declining for the past decade, Mexico continues to be among the top recipients of family remittances worldwide.

Remittances coming from the United States are the majority, making up 94% of total remittances received.[1] Overall, remittance flows from the United States to Mexico have increased from 22.8 billion USD in 2014 to 28.7 billion USD in 2017.

In this piece, we attempt to reconcile the slowdown in Mexican migration with the strong remittance growth we have seen. The absence of a generalized relationship between remittance flows and Mexican-born migrant population growth during the 2014-2017 period leads us to look at several potential factors driving the growth in remittances to Mexico:

  1. Remittance flows increased because more migrants (who are already in the US) are sending remittances.[2]
  2. Remittance flows increased because migrants are sending more money (larger principal).

What is unique about this research is that we tackle these questions not just on a national level but among specific US states, recognizing that there are important state-level differences at play. We look at years living in the US, income of the Mexican population in the US, average remittance, number of transactions and number of senders, to shed some light to our research.

The article shows that overall, remittance growth is linked to increased transactions and increased principal. Increased transactions are the result of inter-state migration for states with lower Mexican population. For states with greater Mexican population, increased transactions are not explained by new immigration inflows but are happening because more migrants are sending money, many of which staying longer in the US. The frequency of transactions is slightly higher in states with less Mexican population.

Increases on the principal appear to be relatively income and time inelastic. However, they are higher for states with lower Mexican population and great remittances growth: the principal remitted is moderate in states sending more remittances but is larger in states experiencing higher growth.

[1] Banxico 2017.

[2] Orozco, Porras and Yansura, “The continued growth of family remittances to Latin America and the Caribbean in 2015,”Inter-American Dialogue, 2016.