Remittances as an Insurance Mechanism in the Labor Market

Abstract

The probability that Mexican households receive remittances increases in response to temporary loss of employment by household heads. Evidence indicates that the probability doubles in the short-term, with a stronger effect in the first quarter of unemployment. Taking into account inter-household transfers within Mexico, the increase in the probability of private transfers is similar in households with low and high access to migratory networks in the U. S. The effectiveness of private transfers as an insurance mechanism has been reduced in an environment of economic crisis.