The Development and Fiscal Effects of Emigration on Mexico
Mexico's fiscal balance benefits from emigration—GDP rose 8.8 percent and tax collection 7.4 percent between 1990 and 2000, driven by remittances and labor market effects.
The economic consequences of emigration on migrants’ countries of origin have long been studied, yet the precise assessment of positive and negative impacts remains complex. Such an outlook depends on the magnitude of migration, the demographic and socioeconomic characteristics of migration, and the combined effects on wages and the educational investments of those who remain. The two most salient ways migration influences development within Mexico is through remittances and labor markets, according to this report from MPI's Regional Migration Study Group.
Mexico is the largest recipient of remittances in Latin America, with remittances totaling $22 billion (about 2.5 percent of GDP) in 2010. In some states, remittances are even more important to the local economy.
When looking at Mexico, this analysis finds that when the labor market effects and household income benefits of remittances are compiled into a model of the Mexican economy, Mexico’s fiscal balance appears to benefit from emigration — its economic output rising by 8.8 percent and tax collection by 7.4 percent over the last decade.
Table of Contents
I. Introduction
II. Migration and Development
A. Who Migrates and Who Returns?
B. Remittances
C. Labor Supply and Earnings
III. Fiscal Impacts of Emigration
IV. Conclusions
About the Regional Migration Study Group
This forward-looking initiative focused on shaping collaborative migration and human-capital strategies in North and Central America.
About the U.S. Immigration Policy Program
The U.S. Immigration Policy Program provides analysis of U.S. immigration pathways, the impacts of enforcement and other policies, and the characteristics of immigrant populations.
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