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Remittances, exchange rates and the labor supply of Mexican Migrants in the U.S

Author

Listed:
  • Fox, Marc
  • Stark, Oded

Abstract

This paper assumes that migrants derive utility from their own consumption, their own leisure, and remittances to their family. It hypothesizes that the labor supply and remittances of Mexican migrants in the U.S. are jointly determined. Shits in real exchange rates affect the cost of sending a given real volume of remittances back to the family in the sending country. This in turn induces income and substitution effects on both remittances and labor supply. It is argued that the substitution effect would dominate. Therefore, under reasonable conditions, a real depreciation of the peso should lead to an increase in both remittances and labor supply. Empirical work using U.S. Census data and a data set containing information on Mexican migrants in the U.S. lends support to the theoretical predictions.

Suggested Citation

  • Fox, Marc & Stark, Oded, 1987. "Remittances, exchange rates and the labor supply of Mexican Migrants in the U.S," EconStor Preprints 243208, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:243208
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    File URL: https://www.econstor.eu/bitstream/10419/243208/1/Remittances-exchange-rates-and-the-labor-supply-of-Mexican-migrants-in-the-US.pdf
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    Citations

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    Cited by:

    1. Dean Yang, 2006. "Why Do Migrants Return to Poor Countries? Evidence From Philippine Migrants%u2019 Responses to Exchange Rate Shocks," NBER Working Papers 12396, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Mexican migrants in the U.S.; Labor supply; Remittances; Exchange rate;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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