Location

Portland State University

Start Date

2-5-2018 1:00 PM

End Date

2-5-2018 3:00 PM

Subjects

Public policy and administration, Taxation

Abstract

The purpose of this research is to determine the relationship between remittance income (migrant-dollars sent back home) and its effects on municipal tax revenue generation among municipalities in Mexico. A sharp contrast exists between remittances and own-source municipal tax revenue; remittances constitute a healthy 2% of Mexico’s gross domestic product (GDP) whereas the largest own-source revenue contributes only .2% of GDP (World Bank 2015, OECD 2015). In some instances remittances have been so productive that they have been used to fund local public services among municipalities. The objective of my study becomes two fold: first, determine if there is a relationship between remittances and municipal tax revenues and second, explore whether the relationship changes when comparing northern-border states to southern states. I use a time series data composed by remittance transfer and municipal tax revenue information aggregated for all thirty-one states from 2003-2016. Using a combination of t-test and multiple regression tests, results indicate there is a significant difference in remittance variance between northern-border and southern states. In general remittances act as subsidy rather than a supplement to local governments and for every one-remittance peso received there is a corresponding .12 tax decrease.

Persistent Identifier

http://archives.pdx.edu/ds/psu/25062

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May 2nd, 1:00 PM May 2nd, 3:00 PM

Do Remittances Promote or Deter Sound Fiscal Management Among Municipalities in Mexico?

Portland State University

The purpose of this research is to determine the relationship between remittance income (migrant-dollars sent back home) and its effects on municipal tax revenue generation among municipalities in Mexico. A sharp contrast exists between remittances and own-source municipal tax revenue; remittances constitute a healthy 2% of Mexico’s gross domestic product (GDP) whereas the largest own-source revenue contributes only .2% of GDP (World Bank 2015, OECD 2015). In some instances remittances have been so productive that they have been used to fund local public services among municipalities. The objective of my study becomes two fold: first, determine if there is a relationship between remittances and municipal tax revenues and second, explore whether the relationship changes when comparing northern-border states to southern states. I use a time series data composed by remittance transfer and municipal tax revenue information aggregated for all thirty-one states from 2003-2016. Using a combination of t-test and multiple regression tests, results indicate there is a significant difference in remittance variance between northern-border and southern states. In general remittances act as subsidy rather than a supplement to local governments and for every one-remittance peso received there is a corresponding .12 tax decrease.