NCPA - National Center for Policy Analysis


March 3, 2010

Mexico has benefited considerably in the last decade from migrant workers' remittances, says the National Journal.  Its citizens in the United States sent $25.1 billion home in 2008, up from $8.9 billion in 2001.  That figure has since dipped as the U.S. economy has struggled and construction (a primary job field for low-skill migrant labor) has slowed.  But remittances still accounted for 2.3 percent of Mexico's gross domestic product (GDP) in 2008, according to the Multilateral Investment Fund at the Inter-American Development Bank. 

At first glance, the comprehensive immigration bill introduced Dec. 15 by Rep. Luis Gutierrez (D-Ill.), would appear to set up Mexico for even more remittances, however, that's not how things panned out in the late 1980s, when the Immigration Reform and Control Act (IRCA) granted 2.7 million undocumented immigrants a quick path to legal status.  Rather than send more, the roughly two million Mexicans with newfound legal status began wiring less money home, according to a 2009 report by Catalina Amuedo-Dorantes, an economics professor at San Diego State University, and Francesca Mazzolari, an economics professor at the University of California, Irvine: 

  • Mexicans who gained legal status were 5 percent less likely to remit, and those who did sent a staggering 26 percent less.
  • Interestingly, other Latin Americans who won legal status through IRCA kept remitting at the same pace. 

Why the drop?  Amuedo-Dorantes argues that it was a combination of factors: 

  • Migrants who were sending money home to stay in the good graces of relatives, should they be deported and need their help, no longer needed that insurance policy.
  • Others who had been sending funds to their families began bringing their spouses and children to the United States.
  • And others, who were investing in homes and businesses with a plan of returning home, may have decided to put down stakes in the United States once they obtained green cards. 

If the millions of Mexicans working illegally in the United States follow the same pattern, Mexico would lose $2.2 billion a year in remittances, Amuedo-Dorantes estimates.  By comparison, the State Department's fiscal 2011 budget request for aid to Mexico is about $347 million. 

Source: David Gauvey Herbert, "How Amnesty Could Cost Mexico," National Journal, February 11, 2010. 

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