Introduction to Remittances and Their Impact on Poverty
Remittances sent by Mexican nationals to their relatives in Mexico constituted one-third of the income for the poorest households, according to the National Survey of Household Income and Expenditure (ENIGH) 2024, conducted by the National Institute of Statistics and Geography (Inegi).
Distribution Among Income Groups
An analysis by the organization México ¿Cómo Vamos? explains that between the first and fifth deciles (lower-income families), 4 to 6% of these households received remittances in 2024. In contrast, the higher-income deciles (deciles 1 to 5) received remittences in 1 to 4% of their families.
The analysis further explains, “Among the households that report receiving remittances, these incomes represent nearly a third of the income in lower deciles and less than a fifth in higher ones. However, there has been a decrease at both ends of the distribution between 2022 and 2024, with more significant drops in higher deciles.”
Impact on Poorest Households
In the poorest households (first decile), remittances accounted for 33.2% of their current income, which was 16,795 pesos per quarter. This percentage is lower than in 2022 when remittances represented 35.9% of family income.
Conversely, in the wealthiest households (tenth decile), remittances accounted for 11.9% of their 236,095 pesos quarterly income. Two years prior, remittances represented 22% of their income.
Additional Context and Considerations
México ¿Cómo Vamos? also highlights that, besides government transfers, remittances from abroad are crucial for low-income Mexican households.
The number of households receiving remittances in the past year contrasts with the monthly flow of remittances entering the country, as noted by México ¿Cómo Vamos? A possible explanation for this discrepancy could be underreporting of such incomes by interviewees. Nonetheless, a more in-depth analysis on the destination of remittances in income distribution is required.
According to data from Banco de México (Banxico), 2023 witnessed a historic flow of remittances, totaling 64,745 million dollars – a 2.25% increase compared to the previous year.
Earlier, the Center for Latin American Monetary Studies (Cemla) pointed out that the 2022 ENIGH underestimated income from remittances, as it only captured 8.4% of the remittances that entered Mexico that year.
“The 2022 ENIGH only captured around two-fifths of household income and nearly one-third of household expenditures. The issue is more pronounced regarding remittances received by Mexican households from relatives abroad… The 2022 ENIGH only captured 8.4% of this income, leaving out approximately 53,577 million dollars in remittances that elevated the living standards of Mexican households,” Cemla stated.
Key Questions and Answers
- What are remittances? Remittances are funds sent by migrant workers to their families in their home countries.
- Who are the primary senders of remittances to Mexico? Mexican nationals working abroad are the main senders of remittances to their relatives in Mexico.
- How significant are remittances for lower-income households in Mexico? In 2024, remittances accounted for nearly one-third of the income for the poorest households in Mexico.
- Why is there a discrepancy between the number of households receiving remittances and the monthly flow entering the country? Possible reasons include underreporting of remittance income by interviewees, necessitating further analysis on the destination of remittances in income distribution.
- How have remittances changed for both lower and higher-income households between 2022 and 2024? There has been a decrease in remittances’ proportion of income for both lower and higher-income deciles, with more significant drops observed in the higher deciles.
