Remittances and labour market outcomes: Evidence from Mexico

The effects of remittances on labour market outcomes have been studied by many researchers, primarily using micro-level data. While a few studies have also used macro-level data, they suffer from endogeneity bias due to the inclusion of remittances in their estimations. The present study attempts to fill the gap in the literature by using a set of panel data of Mexican states and by addressing the endogeneity bias with a system GMM (generalized method of moments) estimator. The main conclusions are that remittances increase labour force participation rates and reduce median hours worked, critical employment and unemployment duration.