This paper presents evidence on the economic effects of remittances from abroad on households’ spending decisions. The paper finds that robust estimates that take into account selection and endogeneity problems in estimating an average impact of remittances are substantially different from naïve OLS estimates. The estimates suggest that children from recipient households do not stay longer at school. Remittances also reduce male adult labor supply, while female labor supply remains unaffected.

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An important issue that has not been examined in the Mexican migration literature is the cost versus the benefits of migration for Mexico. That is, the linkage between increasing rates of Mexican immigration, Mexican incomes, rates of crime in Mexico, and the incidence of AIDS in Mexico has not been established. We find a positive correlation between AIDS, narco-trafficing, and migration, but no significant linkage between ncreased immigration and increased Mexican incomes.

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Prior research on Mexican migration has shown that social networks and economic incentives play an important role in determining migration outcomes. This study utilizes experimental data from PROGRESA, Mexico's primary poverty reduction program, to evaluate the effects of public cash transfers on migration both domestically and to the US. Controlling for family and community migration networks, the analysis shows that public cash transfers reduce US migration but not domestic migration.

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The paper investigates if workers’ remittances, that are more stable and less cyclical than other private capital flows, can help reduce the probability of current account reversals. We find that indeed a high level of remittances, as a ratio of GDP, makes the relationship between a decreasing (increasing) stock of international reserves (external debt) and a higher probability of current account reversals less stringent.

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In the absence of altruism, there is no obvious reason for a migrant to remit part of his income to his family for investment at the home location. I find that people at the home location can punish families do not give the investments back because they would benefit from future remittances and investments. In equilibrium we find that families can give back part of the investment to the migrant and keep part for private consumption even without altruism on either the migrant and his family.

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We examine network capital usage and migration patterns in a theoretical model. Larger networks reduce time spent crossing borders, decrease time spent searching for jobs, and provide a conduit for transfer payments to retired migrants. We show the number, properties, and dynamics around steady state equilibria depend on the returns to scale of network capital accumulation. We also show that increasing border enforcement will increase the flow of immigrants with constant or increasing returns.

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