Impacts of International Remittances and Government Transfers on Household Spending. Recent Evidence in Mexico

Abstract

The flow of international remittances and government transfers has increased considerably in recent
years. On the one hand, such increases are explained by greater emigration and on the other, by social
policies focused on serving the most vulnerable populations. Using data from National Surveys of
Household Income and Expenditures from 2016 and 2018, propensity score matching models are
estimated to determine changes in the spending patterns of two groups of households: remittance
recipients and government transfer recipients. The results indicate that households receiving remittances
spend more on productive investments and human capital, and those receiving government
transfers spend more on consumption. The findings are relevant as they highlight the need to formulate
policies that promote productive investments in the most disadvantaged households in rural areas
and southern Mexico.
Keywords: International remittances, government transfers, household expense, Mexico, treatment
effects
JEL classification: D64, H53, D10 and C21