{ "title": "The Unexpected Rise in Remittances to Central America and Mexico During the Pandemic", "publication": "IMF News, September 21, 2022", "sourceUrl": "https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances", "canonical": "https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances", "overlayPath": "/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/index.md", "summary": "Remittances hit record levels in 2021 driven by rising US wages and unemployment insurance relief.", "authors": [ "Yorbol Yakshilikov September" ], "publishDate": "2022-09-21", "sections": [ { "heading": "Overview", "content": "- Remittances hit record levels in 2021 driven by rising US wages and unemployment insurance relief.\n- Remittances are a crucial source of income in Central America, Panama, and the Dominican Republic (CAPDR) as well as Mexico.\n- IMF staff research investigates why remittances from the US to CAPDR and Mexico remained resilient during the pandemic." }, { "heading": "An unexpected comeback", "content": "- Economists predicted remittances to CAPDR and Mexico would decline by up to 20 percent given the fall in US employment at the onset of the pandemic.\n- Traditional macroeconomic models linking US labor market conditions with immigrants’ income:\n - Accurately predicted the deep but brief collapse in remittances observed in April 2020.\n - Failed to predict the strong comeback that followed in 2020 and the record levels in 2021." }, { "heading": "Explaining the surge", "content": "- Pre-pandemic determinant: the number of remittance transactions—the volume effect—largely determined remittance levels.\n- The jump in remittances in the second half of 2020 resulted from:\n - An increase in the number of transactions (volume effect).\n - An increase in the average amount remitted per transaction (value effect).\n- Drivers of the volume effect:\n - Increase in the number of people sending remittances rather than new immigrants arriving in the US.\n - Shift to digital remitting due to lockdowns, increasing the number of transactions.\n- Drivers of the value effect (most important):\n - Rising US wages drove increases in average amounts remitted.\n - US government assistance through unemployment insurance relief supported incomes and compensated for loss of income.\n - A strong “altruism” motive: as COVID-19 cases rose at home, immigrants in the US sent on average more money home." }, { "heading": "Persistence in 2021", "content": "- Remittances remained strong in 2021 due to:\n - US labor market recovery.\n - Sustained growth in real wages.\n- By the end of 2021:\n - The service sectors where CAPDR and Mexican immigrants predominantly work recovered.\n - These sectors recorded increases in weekly earnings that were above the US average." }, { "heading": "A look ahead", "content": "- Growth in remittances to CAPDR and Mexico is expected to slow as some extraordinary factors in 2020 and 2021 dissipate.\n- Over time, remittances are expected to grow because:\n - Immigration to the US continues to rise.\n - The average amount remitted grows in line with US wages.\n- If employment and wages remain strong in the US, remittances are expected to increase during times of hardship in Central America and Mexico, as immigrants help families back home.\n\nSource: https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances\n\n---\n\n Content in this bundle\n\n- wpiea2022092-print-pdf\n - wpiea2022092-print-pdf (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - wpiea2022092-print-pdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- REGIONAL ECONOMIC OUTLOOK\n- CAPDR REPRESENTATIVE OFFICE\n- https://www.imf.org/en/News/country-focus\n- https://www.imf.org/en/publications/weo\n- Global Economy in Crosscurrents of War and Technology\n- https://www.imf.org/en/publications/gfsr\n- Global Financial Markets Confront the War in the Middle East and Amplification Risks\n- https://www.imf.org/en/publications/fm\n- Fiscal Policy under Pressure: High Debt, Rising Risks\n- https://www.imf.org/en/publications/reo\n- Asia and Pacific\n- Europe\n- Middle East and Central Asia\n- Sub-Saharan Africa\n- Western Hemisphere\n- https://www.imf.org/en/publications/areb\n- Getting to Growth in an Age of Uncertainty\n- More Publications\n- Mexico\n- US economy\n- Central America\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances" } ], "bullets": [ "[Markdown version](/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/index.md)", "[Structured JSON version](/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/index.json)", "[Bundle manifest](/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/bundle-manifest.json)", "Authors: Yorbol Yakshilikov September", "Published: September 21, 2022", "Remittances hit record levels in 2021 driven by rising US wages and unemployment insurance relief.", "Remittances are a crucial source of income in Central America, Panama, and the Dominican Republic (CAPDR) as well as Mexico.", "IMF staff research investigates why remittances from the US to CAPDR and Mexico remained resilient during the pandemic.", "Economists predicted remittances to CAPDR and Mexico would decline by up to 20 percent given the fall in US employment at the onset of the pandemic.", "Traditional macroeconomic models linking US labor market conditions with immigrants’ income:", "Pre-pandemic determinant: the number of remittance transactions—the volume effect—largely determined remittance levels.", "The jump in remittances in the second half of 2020 resulted from:", "Drivers of the volume effect:", "Drivers of the value effect (most important):", "Remittances remained strong in 2021 due to:", "By the end of 2021:", "Growth in remittances to CAPDR and Mexico is expected to slow as some extraordinary factors in 2020 and 2021 dissipate.", "Over time, remittances are expected to grow because:", "If employment and wages remain strong in the US, remittances are expected to increase during times of hardship in Central America and Mexico, as immigrants help families back home.", "**wpiea2022092-print-pdf**", "[REGIONAL ECONOMIC OUTLOOK](https://www.imf.org/en/Publications/REO/WH/Issues/2022/04/22/regional-economic-outlook-for-western-hemisphere-april-2022)", "[CAPDR REPRESENTATIVE OFFICE](https://www.imf.org/en/Countries/ResRep/CAM-Region)", "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)", "[https://www.imf.org/en/publications/weo](https://www.imf.org/en/publications/weo)", "[Global Economy in Crosscurrents of War and Technology](https://www.imf.org/en/publications/weo/issues/2026/07/08/world-economic-outlook-update-july-2026)", "[https://www.imf.org/en/publications/gfsr](https://www.imf.org/en/publications/gfsr)", "[Global Financial Markets Confront the War in the Middle East and Amplification Risks](https://www.imf.org/en/publications/gfsr/issues/2026/04/14/global-financial-stability-report-april-2026)", "[https://www.imf.org/en/publications/fm](https://www.imf.org/en/publications/fm)", "[Fiscal Policy under Pressure: High Debt, Rising Risks](https://www.imf.org/en/publications/fm/issues/2026/04/15/fiscal-monitor-april-2026)", "[https://www.imf.org/en/publications/reo](https://www.imf.org/en/publications/reo)", "[Asia and Pacific](https://www.imf.org/en/publications/reo/apac)", "[Europe](https://www.imf.org/en/publications/reo/eu)", "[Middle East and Central Asia](https://www.imf.org/en/publications/reo/meca)", "[Sub-Saharan Africa](https://www.imf.org/en/publications/reo/ssa)", "[Western Hemisphere](https://www.imf.org/en/publications/reo/wh)", "[https://www.imf.org/en/publications/areb](https://www.imf.org/en/publications/areb)", "[Getting to Growth in an Age of Uncertainty](https://www.imf.org/en/publications/areb/issues/2025/09/24/annual-report-2025)", "[More Publications](https://www.imf.org/en/publications)", "[Mexico](https://www.imf.org/en/Countries/MEX)", "[US economy](https://www.imf.org/en/News/Articles/2022/07/11/CF-US-Economy-Inflation-Challenge)", "[Central America](https://www.imf.org/en/News/Articles/2022/06/29/CF-Central-America-resilient-growth)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "related": [ { "title": "wpiea2022092-print-pdf", "role": "paper", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2022/english/wpiea2022092-print-pdf.pdf", "summary": { "path": "/-/media/files/publications/wp/2022/english/wpiea2022092-print-pdf.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2022/english/wpiea2022092-print-pdf.pdf", "mime": 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