188
l
PABLO ACOSTA, JAVIER BAEZ, RODOLFO BEAZLEY, AND EDMUNDO MURRUGARRA
U.S. unemployment rate (%)
FIGURE 15.3 U.S. Unemployment Rates for Total Population and for Hispanics, 2005–10 14 Hispanic
12 10 8
total
6 4 2
Jan. 2005 Mar. 2005 May 2005 July 2005 Sep. 2005 Nov. 2005 Jan. 2006 Mar. 2006 May 2006 July 2006 Sep. 2006 Nov. 2006 Jan. 2007 Mar. 2007 May 2007 July 2007 Sep. 2007 Nov. 2007 Jan. 2008 Mar. 2008 May 2008 July 2008 Sep. 2008 Nov. 2008 Jan. 2009 Mar. 2009 May 2009 July 2009 Sep. 2009 Nov. 2009 Jan. 2010 Mar. 2010 May 2010 July 2010
0
Source: U.S. Bureau of Labor Statistics.
In parallel, recorded remittances to El Salvador fell 8.5 percent in 2009 (in nominal terms), the most dramatic decline in the last two decades. Moreover, according to household survey data (which may also include remittances flowing through informal channels), the drop was even more drastic: around 11.9 percent. According to the elasticities estimated before, this fall in remittances is more in line with the predicted evolution of U.S. unemployment, and higher than the one predicted by the evolution of U.S. GDP. Although rural households tend to rely more on remittances, the decline in remittance flows was sharper in urban areas (figure 15.4). In 2009 remittance inflows decreased by 12.6 percent in urban households and 11.7 percent in rural households. The metropolitan area of San Salvador was among the most affected regions, with a decline of about 15 percent. The Oriental area (where most of the migrants come from and predominantly rural) was for some reason better off ; remittances decreased there by 7.6 percent. Using 2009 household survey data, we estimate that a 10 percent average decline in remittances in El Salvador in 2009 (the average between the actual declines in macroeconomic and microeconomic figures of 8.5 and 11.9 percent, respectively) would have increased national poverty by 1.6 percentage points, from a counterfactual 41.7 percent to the real value of 43.3 percent in 2009. The poverty-increasing effect of lower remittances would have been stronger in rural regions, given the higher dependency on remittances as a source of income. In urban regions, poverty would increase from 37 (counterfactual) to 38.2 percent (actual) under an average 10 percent decline in remittances for 2009, and in rural regions the change would be from 49.6 to 52 percent. Unfortunately, a counterfactual scenario is very hard to construct in the absence of information on migrant characteristics to estimate the amount that would have been