International Remittances as a Driver of Domestic Tourism Expenditure: Evidence from Mexico

Abstract

This article aims to empirically assess the impact of international remittances on domestic tourism expenditure (DTE) in Mexican households. Using Probit and Tobit regressions with instrumental variables and information from the 2016 National Household Income and Expenditure Survey, our findings show that international migrants’ remittances can improve DTE among Mexican households. Controlling for endogeneity of remittances, the results show a statistically significant and positive impact of international remittances on both the probability and the amount of money spent on domestic tourism. This suggests that international remittances provide the necessary resources to alleviate the liquidity constraints that restrict access to tourism activities for recipient households. This research also highlights the need to encourage public policy recommendations aimed at promoting tourism-related development in Mexico.

Can Remittance Promote Tourism Income and Inclusive Gender Employment? Function of Migration in the South African Economy

“…The channels in which migration and remittance can affect the economy documented in the empirical literature include short-run, long-run, and causal effects (Sevencan 2023;Chowdhury et al 2023). The existing research often focuses on specific regions or sectors, leaving a gap in understanding the short-and long-run implications for employment and tourism income (Ghani and Morgandi 2023;Noushad et al 2022;Mora-Rivera and García-Mora 2021).…”

International Remittances and International Tourism Development in South Asia: The Moderating Role of Political Stability

“…This section provides a review of the relevant literature analyzing the impact of IRM and PS on ITR. Although a few studies have analyzed the association between IRM and domestic tourism growth (Cerón and Mora, 2014;Mora-Rivera et al, 2019;Mora-Rivera and García-Mora, 2021), the empirical literature on the association between IRM and ITR remains inconclusive, especially in the context of South Asian countries.…”

“…Past studies argue that there is a significant role of ITR in stimulating employment and economic growth (EG) in a country (Adedoyin et al, 2021;Briedenhann and Wickens, 2004;Mazzola et al, 2019;Paramati et al, 2017;Seetanah, 2011). Similarly, IRM is an important driver for the tourism sector, specifically for developing countries (Mora-Rivera and García-Mora, 2021). The Asian Development Bank (ADB) reported that South Asian countries received USD 139.8 billion from IRM in 2019 (Asian Development Bank, 2020).…”

“…In addition, ITR contributes significantly to developing countries economic development, having a 10% share in the global GDP and generating approximately 330 million jobs in 2019 (World Travel and Tourism Council, 2019). Although few studies have examined the role of IRM in promoting domestic tourismrelated spending by recipient households (Bassey et al, 2019;Mora-Rivera et al, 2019;Mora-Rivera and García-Mora, 2021), the literature on the relationship between IRM and ITR remains inconclusive. For developing countries, IRM has become a significant driver for economic development.…”