Review of Economics of the Household

, Volume 9, Issue 1, pp 69–98 | Cite as

New evidence on the role of remittances on healthcare expenditures by Mexican households

  • Catalina Amuedo-DorantesEmail author
  • Susan Pozo


Using Mexico’s 2002 wave of the Encuesta Nacional de Ingresos y Gastos de los Hogares (ENIGH), we find that international remittances raise health care expenditures. Approximately 6 pesos of every 100 peso increment in remittance income are spent on health. The sensitivity of health care expenditures to variations in the level of international remittances is almost three times greater than their sensitivity to changes in other sources of household income. Furthermore, health care expenditures are less responsive to remittance income among lower-income households. Since the lower responsiveness may be partially due to participation of lower-income households in public programs like PROGRESA (now called Oportunidades), we also analyze the impact of remittances by health care coverage. As expected, we find that households with some kind of health care coverage—either through their jobs or via participation in PROGRESA—spend less of remittance income increments on health care than households lacking any health care coverage. Hence, remittances may help equalize health care expenditures across households with and without health care coverage.


Remittances Household expenditures Healthcare Mexico 

JEL classifications

F24 I1 


  1. Amuedo-Dorantes, C., Pozo, S., & Sainz, T. ( 2007). Remittances and healthcare expenditure patterns of populations in origin communities: Evidence from Mexico. Integration & Trade Journal, 27, 159–184.Google Scholar
  2. Ando, A., & Modigliani, F. (1957). Tests of the life cycle hypothesis of saving. Bulletin of the Oxford Institute of Statistics.Google Scholar
  3. Basmann, R. L. (1960). On finite sample distributions of generalized classical linear identifiability test statistics. Journal of the American Statistical Association, 55(292), 650–659.CrossRefGoogle Scholar
  4. Baum, C. F., Schaffer, M. E., & Stillman, S. (2002). Instrumental variables and GMM: Estimation and testing. Working paper no. 545, Department of Economics, Boston College. Available at:
  5. Brown, R. P. C. (1997). Estimating remittance functions for Pacific Island migrants. World Development, 25(4), 613–626.CrossRefGoogle Scholar
  6. Cox, D., Eser, Z., & Jimenez, E. (1998). Motives for private transfers over the life cycle: An analytical framework and evidence for Peru. Journal of Development Economics, 55(1), 57–80.CrossRefGoogle Scholar
  7. de Salud, S. (2002). Síntesis Ejecutiva: Poblaciones de las Instituciones Prestadoras de Servicios de Salud de Mexico: Definición y Construcción. Mexico.Google Scholar
  8. de Salud, S. (2008). Seguro Popular at:
  9. Duan, N., Manning, W. G., Morris, C. N., & Newhouse, J. P. (1983). A comparison of alternative models for the demand for medical care. Journal of Business & Economic Statistics, 1(2), 115–126.CrossRefGoogle Scholar
  10. Duan, N., Manning, W. G. Jr., Morris, C. N., & Newhouse, J. P. (1984). Choosing between the sample-selection model and the multi-part model. Journal of Business & Economic Statistics, 2(3), 283–289.CrossRefGoogle Scholar
  11. Duryea, S., López-Córdova, E., & Olmedo, A. (2005). Migrant remittance and infant mortality: Evidence from Mexico. Unpublished manuscript.Google Scholar
  12. Frank, R., & Hummer, R. A. (2002). The other side of the paradox: The risk of low birth weight among infants of migrant and nonmigrant households within Mexico. International Migration Review, 36(3), 746–765.CrossRefGoogle Scholar
  13. Frenk, J., Sepúlveda, J., Gómez-Dantés, O., & Knaul, F. (2003). Evidence-based health policy: Three generations of reform in Mexico. The Lancet, 362(November 15), 1667–1671.CrossRefGoogle Scholar
  14. Friedman, M. (1957). A theory of the consumption function. Princeton: Princeton University Press.Google Scholar
  15. Funkhouser, E. (1995). Remittances from international migration: A comparison of El Salvador and Nicaragua. Review of Economics and Statistics, 77(1), 137–146.CrossRefGoogle Scholar
  16. Grossman, M. (1972). On the concept of health capital and the demand for health. Journal of Political Economy, 80(2), 223–255.CrossRefGoogle Scholar
  17. Hay, J. W., & Olsen, R. J. (1984). Let them eat cake: A note comparing alternative models of the demand for medical care. Journal of Business & Economic Statistics, 2(3), 279–282.CrossRefGoogle Scholar
  18. Hildebrandt, N., & McKenzie, D. J. (2004). The effects of migration on child health in Mexico. Unpublished manuscript, Stanford University.Google Scholar
  19. Hoddinott, J. (1994). A model of migration and remittances applied to Western Kenya. Oxford Economic Papers, 46(3), 459–476.Google Scholar
  20. Kanaiaupuni, S. M., & Donato, K. M. (1999). Migradollars and mortality. The effects of migration on infant survival in Mexico. Demography, 36(3), 339–353.CrossRefGoogle Scholar
  21. Leland, H. E. (1968). Saving and uncertainty: The precautionary demand for saving. Quarterly Journal of Economics, 82, 465–473.CrossRefGoogle Scholar
  22. Levitt, P. (1997). Transnationalizing community development: The case of migration between Boston and the Dominican republic. Nonprofit and Voluntary Sector Quarterly, 26(4), 509–526.CrossRefGoogle Scholar
  23. López Córdova, E. (2004). Globalization, migration and development. The role of Mexican migrant remittances. Mimeo: Inter-American Development Bank.Google Scholar
  24. Manning, W. G. (1998). The logged dependent variable, heteroscedasticity, and the retransformation problem. Journal of Health Economics, 17, 283–295.CrossRefGoogle Scholar
  25. Migration Policy Institute. (2007). Variable Impacts: State-level Analysis of the Slowdown in the Growth of Remittances to Mexico. Migration Facts, September 2007, No. 19.Google Scholar
  26. Mullahy, J. (1998). Much Ado about two: Reconsidering retransformation and the two-part model in health econometrics. Journal of Health Economics, 17, 247–281.CrossRefGoogle Scholar
  27. Newey, W. (1985). Generalized method of moments specification testing. Journal of Econometrics, 29, 229–256.CrossRefGoogle Scholar
  28. Perez-Stable, E. J., Slutkin, G., Paz, E. A., & Hopewell, P. C. (1986). Tuberculin reactivity in United States and foreign-born Latinos: Results of a community-based screening program. American Journal of Public Health, 76(6), 643–646.CrossRefGoogle Scholar
  29. Ravallion, M., & Dearden, L. (1988). Social security in a ‘moral economy’: An empirical analysis for Jav. Review of Economics and Statistics, 70(1), 36–44.CrossRefGoogle Scholar
  30. Rozelle, S., Taylor, J. E., & DeBrauw, A. (1999). Migration, remittances, and agriculture productivity in China. The American Economic Review, 89(2), 287–291.CrossRefGoogle Scholar
  31. Sargan, J. D. (1958). The estimation of economic relationships using instrumental variables. Econometrica, 26, 393–415.CrossRefGoogle Scholar
  32. Schrieder, G., & Knerr, B. (2000). Labour migration as a social security mechanism for smallholder households in Sub-Saharan Africa: The case of Cameroon. Oxford Development Studies, 28(2), 223–236.CrossRefGoogle Scholar
  33. Staiger, D., & Stock, J. H. (1997). Instrumental variables regression with weak instruments. Econometrica, 65(3), 557–586.CrossRefGoogle Scholar
  34. Stark, O. (1982). Research on rural-to-urban migration in LDCs: The confusion Frontier and why we should pause to rethink afresh. World Development, 10(1), 63–70.CrossRefGoogle Scholar
  35. Taylor, J. E. (1992). Remittances and inequality reconsidered: Direct, indirect, and intertemporal effects. Journal of Policy Modeling, 14(2), 187–208.CrossRefGoogle Scholar
  36. Valero-Gil, J. N. (2008). Remittances and the household’s expenditures on health. Mimeo, Universidad Autonoma de Nuevo Leon, Monterrey, Mexico.Google Scholar
  37. Wooldridge, J. M. (2003). Introductory econometrics: A modern approach (2nd ed.). South-Western Publisher.Google Scholar
  38. World development indicators. Washington, DC: The World Bank (2005).Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of EconomicsSan Diego State UniversitySan DiegoUSA
  2. 2.Department of EconomicsWestern Michigan UniversityKalamazooUSA

Personalised recommendations