There has been a growing interest in the public media and governmental institutions in the recent slowdown in workers’ remittances sent to Mexico. In this article we study several possible reasons for this slowdown.  We start by analyzing the recent improvements in Mexican workers’ remittances data. Next, we calculate correlation coefficients between remittance flows to Mexico and several measures of economic activity in the US and Mexico. Finally, we estimate a six variable vector autoregressive (VAR) model. Our analysis suggests that improvements in remittance data may have accounted for only a small portion of the drop in the remittances growth rate. Likewise, other variables such as Hispanics unemployment in the US and US output do not seem to have a strong impact on remittance transfers. In contrast, we find robust evidence that US housing variables have an impact on remittance transfers. Positive shocks to three different measure of US housing activity (US housing starts, US housing permits and US houses sold) have a positive and significant impact on remittances. Remittances also seem to be positively correlated with US housing variables over time. Hence, from all the possible explanations about the recent slowdown in workers’ remittances to Mexico analyzed in this study, our results suggest that the decrease in US housing activity has the most empirical support.

Keywords: remittances, Mexico, housing, migration
JEL Codes: F24, F22, R31