Remittances and Multidimensional Poverty in Mexico: A Comparative Analysis of Income Sources

Observation

Answer

1. Page 1 The authors state: "In Mexico, there are at least two 22 distinct approaches to measuring poverty: economic well-being and social rights. The latter approach encompasses indicators such as access to food, health care, education, social 24 security, and dignified housing."  - The authors need to mention monetary poverty approach that is employed in measuring SDG 1 and widely employed by the WBG that is the custodian for the SDG 1.

The comment in the first paragraph of the introduction (page 1) was addressed by incorporating the WBG perspective.

2.Paragraph two particularly lines 34-40 seem to suggest that in monetary poverty non-labor income is not accounted, which is not the case. This is misleading to the reader and needs to be revised and made clearer and more consistent. Please rephrase.

The income component was added to the paragraph and the paragraph was adjusted to reflect the reviewer's comments (lines 39-47).

3.64-68: page 2: The authors cite that Remittances have gained relevance as a source of income. This seems like a new finding but there are decades of research on this from the migration literature. Please review and update.

The information in lines 75 to 76 of the current document on page 2 has been adjusted and updated.

4. Missing from the Introduction:  1. The source of remittances which is migrant labor predominantly in the US needs to be mentioned and it would be useful since it is a paper spanning 2010-2022 to cite evidence estimating the total number of Mexicans illegal and legal in the US and to summarize the total amount of remittances sent from the US to Mexico per annum over the period.

In the updated document, the information has been adjusted to include data on migrants in the United States and the total remittances during the period (see lines 81 to 96).

5.The main conclusion of the paper is very timely for the development priorities of today, especially the WBGs recent announcement on the focus on jobs. As such it would be useful to add this framing both to the introduction and conclusion as your results support this development trend.

This argument was reinforced in the introduction and conclusions of the manuscript.

6. Section 2 Page 3 In lines 120-125 you cite the millions of people in poverty and the change, this is useful but you need to anchor the reader in the total current population of Mexico.

Information on the total number of people in Mexico has been added. This information can be found on lines 149 to 155 on page 4.

7. Page 5, Table 2: This is useful to see remittance growth rates but it is a lot of information. Maybe you can aggregate by the poorest states and put the rest in an annex? I am not learning that much from this table as is. Second I still have not learned by page 5 the total annual average of remittances into Mexico over the period you are covering. This figure should be a headline figure of your paper and you may consider actually adding a figure on remittances grouped by sensible regional groupings instead of states as there are 31 states and 1 federal entity.

The information was adjusted by region in Mexico, and the states were grouped by region to visualize the poorest region in Mexico and remittance flows (Tables 2 and 3). This information can be found in the updated document, on pages 6 and 7 of the document, in lines 217 to 265.

8. Section 5. Results and Discussions Page 11 Lines 445-454: The claim that given your findings of the role of state social spending and the effects of transfers and assistance on the reduction of multidimensional poverty which are inconclusive and then you conclude that "it is important to consider the limitations and effectiveness of social policy in addressing structural poverty." I suggest reviewing this paragraph carefully and the claims you make. Is it correct to assume that all state social spending aims to address structural poverty?

It was adjusted in lines 559 to 565 on page 13 of the updated document, referring to the need to evaluate social programs to determine a structural change in multidimensional poverty.

Observation

Answer

1.The topic proposed in the study is relevant, particularly in the case of Latin American countries such as Mexico. Although the abstract covers the necessary elements, the results could be specified and the explicit contributions of the study indicated.

The introduction was adjusted and the main contribution of the document was highlighted, aligned with the research question and hypothesis of the document.

2. As for the introduction and literature review section, there is evidence of up-to-date references and a robust justification of the multidimensional poverty approach that is the focus of the study, but the approach to the research problem could be improved by indicating the contribution in terms of the question to be answered and the gap that it is expected to fill. Improve the formulation of the research hypothesis, not simply establish a description. It is suggested that the relationship between the reviewed theory and the context of Mexico be explored in greater depth, since although some statistics are presented, the institutional framework that contributes or does not contribute to the treatment of remittances is not explained. There is no critical analysis of the literature; it is only descriptive.

The hypothesis and research question were adjusted according to the reviewer's suggestion. The updates can be found in the updated document, on page 1, lines 106 to 113.

Similarly, the literature was adjusted to incorporate the institutional perspective of remittances based on the perspectives of the New Economics of Labor Migration, see page 8, lines 325 to 335.

3. In terms of methodology, although the random effects model is mentioned, it is not explained. What should be validated in the fixed effects model in terms of autocorrelation and heteroscedasticity and what would be its correction? Why are fixed effects selected? This is not explained. 

Equations 5, 6, and 7 were added to reflect the possibility of choosing random effects for the data panel. Likewise, the use of fixed effects and the control of autocorrelation and heteroscedasticity through robust standard errors were justified. The adjustments can be found on page 11, lines 453 to 466.

4. Although the period from 2010 to 2022 is established, it is then indicated that it is biennial. Why not use a dynamic panel? The problem of endogeneity that could exist between remittances and income from work is not analysed. This would require the use of GMM, which should be considered a limitation of the work

A paragraph was added to page 11 of the updated document to justify why a generalized method of moments (GMM) model, as proposed by Arellano and Bond (1991), is not viable for the proposed analysis, given that the observations are small and the time frame is short. Following Roodman (2009), the small size of our sample could lead to overidentification issues and a loss of efficiency when using an instrument (lag).

5. A more in-depth discussion of the results is required, rather than a merely descriptive one. The conclusions are general and repetitive.

Following the reviewer's instructions, the conclusions were adjusted in greater depth, and not only based on descriptive aspects. The update can be found in the updated document in section 6, lines 581 to 656.