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 Latin America, the United States represents the most important destination, with 62.1 million Latinos living there according to U.S. Census Bureau. This paper analyses the effect that migration and 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 remittances, a reduction of 6.7% is observed in the poor population and 10% in relation to the poverty gap.