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In the same fashion governments throughout emerging

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Unformatted text preview: ing economic times because there are able to adjust more quickly than the native‐born competitors for the same jobs, as they are able to change residence swiftly for work‐related reasons. In addition, earning expectations in the home countries are not better and enhanced border controls dissuade migrants from temporarily returning home to explore other opportunities. Figure 3: Average Weekly Wages of Hispanics in the Bottom Decile, by Quarter, Not Seasonally Adjusted, Current Dollars Source: Bureau of Labor Statistics, Current Employment Statistics survey On the other hand, the U.S. labor market conditions of potential senders are deteriorating, and this is likely to decrease the average amount sent. While immigrants comprise a varied group, remittance senders to LAC are typically recently arrived, young, married men with little education, low earnings, 158 For a description of the forecast methodology see the annex to Rahta, Mohapatra and Xu (2008). About three quarters of the remittances flow to the LAC region originate in the United States. For this reason, the impact of the financial crisis on remittances to Latin America depends mainly on the behavior and circumstances of migration to the U.S. and remittance senders already in the U.S. 159 125 and little familiarity with formal banking systems. As they accumulate more time in the United States, immigrants become less likely to send remittances and the average amount sent drops. Therefore, we looked at the unemployment rate for Mexican immigrants who arrived in the last decade and found that it rose to 12.8 percent in January 2009 from 8.4 percent a year earlier (overall U.S. unemployment rose from 5.7 to 8.6 percent during the same period.). Despite these large changes in employment, for those who have jobs, wages have remained roughly the same or even increased. The median real weekly wages of Hispanics were at their highest level of all time in February 2009, and average real weekly wages of construction workers, were also at a historically high level. Furthermore, average wages of Hispanics in the bottom decile and quartile have been approximately flat since late 2008. Combining both effects, we find that the total earnings of likely remittance senders from the US have declined by about 4.4 percent. Although data on remittances relative to the income of individual migrants is not readily available, coupling median weekly earnings for recent Hispanic immigrants with average amounts of remittances suggests that, very roughly, remittances may constitute between 15 and 25 percent of a typical low‐income migrant’s earnings. Unless this proportion has changed substantially as a result of the crisis, GDP‐based projections of remittances to the LAC region seem to be robust. Several factors explain why the impact of the crisis on remittances is not larger: (i) although migration is likely to decrease, remittances depend on the stock of migrants, not on their flows, and the stock of migrants is not expected to change significantly, (ii) the latest unemployment and salary figures for Hispanic citizens in...
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