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Beyond Experiments in Development EconomicsLocal Economy-wide Impact Evaluation$
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J. Edward Taylor and Mateusz J. Filipski

Print publication date: 2014

Print ISBN-13: 9780198707875

Published to Oxford Scholarship Online: September 2014

DOI: 10.1093/acprof:oso/9780198707875.001.0001

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International Migration, Remittances, and the Impacts of the Great Recession in Rural Mexico

International Migration, Remittances, and the Impacts of the Great Recession in Rural Mexico

Chapter:
13 (p.266) International Migration, Remittances, and the Impacts of the Great Recession in Rural Mexico
Source:
Beyond Experiments in Development Economics
Author(s):

Justin Kagin

Diane Charlton

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198707875.003.0013

This chapter uses a local economy-wide model to evaluate impacts of the 2008–9 global recession in rural Mexico. The model is calibrated using household panel data; a recursive-dynamic version of the model makes it possible to examine long-term as well as short-term impacts. The recession’s immediate effects get transmitted to rural Mexico through migrant remittances, which fall by an estimated 45%. Simulations reveal that each dollar of lost remittances reduces nominal income in rural Mexico by $1.73, as economic activity in local economies contracts. Households without migrants lose 33 cents of income per dollar of remittances lost by households with migrants. Declines in consumption prices partially mitigate welfare losses in the short run. In the long run, lower savings and investment compound the recession’s negative impacts and lead to a convergence of incomes between households with and without migrants.

Keywords:   international migration, Mexico-U.S. migration, global recession, migrant remittances, economy-wide model, migration and development, spillover

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