Remittances, migration and poverty. A study for Mexico and Central America

In the last two decades, remittances have acquired great importance as a source of external income for various developing economies. In the particular case of the Latin America region, the United States represents the most important destination, with nearly 25 million Latinos living in this country. This paper analyses the effect that migration and the sending of remittances have on poverty in Mexico and Central America. The results show that a 10% increase in migration to the United States (as a percentage of the population in the destination country) translates into an 8.6% reduction in the population living on less than US$ 1.90 a day; while the poverty gap is reduced by 12.8%. With regard to the sending of remittances, a reduction of 6.7% is observed in the poor population and 10% in relation to the poverty gap. These results are in line with previous literature and, in general, are maintained to various specifications.