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Cover IMF Working Papers
Evolution of Remittances to CAPDR Countries and Mexico During the COVID-19 Pandemic
Aleksandra Babii, Ms. Alina Carare, Dmitry Vasilyev, and Mr. Yorbol Yakhshilikov
Traditional models relying on standard variables like the U.S. Hispanic unemployment rate fared well in explaining remittances to CAPDR and Mexico during the pre-pandemic period. However, they fail to predict the sustained growth in remittances since June 2020, including the significant increase in the average amount remitted. Using data from over 300 remittances corridors (from 23 U.S. states to 14 Salvadoran departments), we find that this increase is primarily explained by the dynamics of U.S. states real wages, as well as more temporary factors like U.S. unemployment relief (including the extraordinary pandemic support), U.S. states mobility, and COVID-19 infections at home. The paper also analyses what role the change in the modes of transmission of remittances, additional U.S. fiscal stimulus and U.S. labor market developments, especially in the sectors were CAPDR and Mexican migrants preponderantly work, play in explaining aggregate remittances growth.
Keywords:
COVID-19 pandemic; migrant remittances; international migration; remittances dynamics; B. panel Vector Autoregression Model; remittances growth; evolution of remittance; remittances to CAPDR country; Remittances; Real wages; COVID-19; Migration; Unemployment; Central America
Cover IMF Working Papers
Back Matter
Aleksandra Babii, Ms. Alina Carare, Dmitry Vasilyev, and Mr. Yorbol Yakhshilikov

Remittances B. Panel Vector Autoregression Model of Remittances V. EXPLAINING REMITTANCES DYNAMICS BY DECOMPOSING AGGREGATE REMITTANCES VI. EXPLAINING THE INCREASE IN AVERAGE AMOUNT OF REMITTANCES TO EL SALVADOR A. Model and Data B. Estimation and Results C. Understanding the “Altruism” Motive: Home Factors D. Understanding the “Altruism” Motive: Host Factors VII. CONCLUSIONS AND PATH AHEAD REFERENCES ANNEXES I. Alternative Measure of Economic II. CARES Act’s Unemployment Insurance III. U.S. State-Run Support Programs IV. Remittances Data per

Keywords:
dynamics of U.S.
Cover IMF Working Papers
Evolution of Remittances to CAPDR Countries and Mexico During the COVID-19 Pandemic
Aleksandra Babii, Ms. Alina Carare, Dmitry Vasilyev, and Mr. Yorbol Yakhshilikov

aggregate remittances are much more elastic to the U.S. Hispanic unemployment rate. Additional robustness exercises include using a different method (see next subsection). B. Panel Vector Autoregression Model of Remittances As a second step, we used the panel vector autoregression method developed by Abrigo and Love (2016) to further control for endogeneity . This method applies the generalized method of moments estimator and allows all variables to be treated as endogenous as well as cross-sectional dynamics. While this model does not impose long

Keywords:
aggregate remittance; CAPDR country; remittances flow; remittance growth; remittances dynamics; Remittances