Remittances and labor supply in Mexico

This article analyzes the relationship between remittances received and the labor supply of households and individuals receiving them in Mexico. The results of microdata from the 2024 National Survey of Financial Inclusion show that, in Mexico, remittances received are associated with lower participation of beneficiaries in the labor market and in paid employment. Therefore, the income effect of remittances discourages some recipients of these funds from abroad from working. This disincentive effect on labor supply is more pronounced in small communities and among people with lower levels of education. The study also found an inverse relationship between the educational level of adults in the country and the remittances received and the financial support provided by government programs.