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Remittances and COVID-19: A Tale of Two Countries

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Abstract

Looking at the effects of the COVID-19 pandemic on workers’ remittances flowing from the United States, this article focuses on the experiences of two countries, El Salvador and Mexico, which account for approximately 30 percent of all immigrants currently residing in the United States. Following the second quarter’s economic lockdown, transfers to these countries experienced perplexing dynamics. Specifically, remittances to El Salvador witnessed a record 40 percent sudden drop, while Mexico recorded an unexpected 35 percent increase. We discuss some of the narratives proposed to explain this puzzling evidence and propose some alternative hypotheses.

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  • Federico S. Mandelman & Diego Vilán, 2020. "Remittances and COVID-19: A Tale of Two Countries," FEDS Notes 2020-12-30, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:2020-12-30
    DOI: 10.17016/2380-7172.2803
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    File URL: https://www.federalreserve.gov/econres/notes/feds-notes/remittances-and-covid-19-a-tale-of-two-countries-20201230.htm
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    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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