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.