Immigration, remittances and business cycles

Federico Mandelman and Andrei Zlate

Journal of Monetary Economics, 2012, vol. 59, issue 2, 196-213

Abstract: Using data on border enforcement and macroeconomic indicators from the U.S. and Mexico, we estimate a two-country business cycle model of labor migration and remittances. The model matches the cyclical dynamics of unskilled migration, and documents the insurance role of remittances in consumption smoothing. Over the cycle, immigration increases with the expected stream of future wage gains, but it is dampened by a sunk emigration cost. Migration barriers slow the adjustment of the stock of immigrant labor, enhancing the volatility of unskilled wages and remittances. Changes in border enforcement have asymmetric welfare implications for the skilled and unskilled households.

Date: 2012
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Related works:
Working Paper: Immigration, remittances, and business cycles (2010)
Working Paper: Immigration, remittances and business cycles (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:59:y:2012:i:2:p:196-213

DOI: 10.1016/j.jmoneco.2012.01.004

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