Are migrants remittances a source for savings? A life-cycle perspective in Mexican households.

Isalia Nava, El Colegio de México
Roberto Ham-Chande, El Colegio de la Frontera Norte

Remittances from Mexican migrants in the United States have sharply increased. In 2007 they were estimated in 23 billion dollars. This paper analyzes whether households in Mexico are saving from remittances. The study tracks the income and expenditures behavior throughout the life cycle. To examine empirically the dynamic effects pseudo-panels methods are applied to data from the National Survey of Income and Expenditure of Households (ENIGH) for the 1994-2006 period. Main empirical findings are that rates of savings headed by a person between 20 and 40 years old increase slowly, suggesting that remittances are used in current consumption and family support. Between 41 and 59 years old highest rate of savings emerge, with possibilities for investments. In contrast with other findings, rate of savings in households with elderly members are positively and growing. Could be that expending in children is minimal and concern are retirement and aging.