1. Migration, remittances and inactivity in the Western Balkans
Marjan Petreski
University American College Skopje

3. Economic effects of emigration and remittances
Positive
Alleviate poverty
Improve some education and health indicators
Support small-scale investment
Negative
May spur labor-market inactivity (?)
Brain-drain

4. Previous studies findings
Remittances reduce poverty (Petreski et al. 2013; Petreski and Petreski, 2016)
By 3 p.p. in Macedonia (similarly as the work of the social financial assistance)
In BH, Albania and Kosovo, probability of falling into poverty significantly reduced for receiving households;
In Serbia, remittances improve poverty condition for the rural households, while in urban areas, poor households are more prone to send migrants;
Results have been mixed for inequality
Remittances reduce inequality in Macedonia and Kosovo
They increase it in Bosnia (do not potentially flow to the poorest households?)
Results are also mixed for the effect on non-income vulnerability indicators (health, education, leisure etc.)

5. Previous studies findings (2)
Remittances barely meaningful for small-scale investment
Only the richest remittance-receivers invested some of the received money in Macedonia (Petreski et al. 2013)
Remittances spur inactivity, but not for youth (Petreski and Mojsoska-Blazevski, 2014)
Kosovars do not invest the money
Remittances reduce the probability that one would invest this money in Bosnia

6. Migration and inactivity: Theoretical foundations
Individuals allocate time to market work and non-market activities
maximizing utility subject to a budget constraint
Budget constraint:
individual market wage
individual’s non-labor income
Reservation wage
Non-labor income is a major determinant of the reservation wage
function of: own assets and the amount of income of other household members
One can think of remittances as an increase in non-labor income that would lead to a reduction in labor force participation of recipient household members.
“discouraged participation”

7. (left: all; right: females)
Some correlations
(left: all; right: females)

8. Remittances and inactivity: previous findings
Abazi et al. (2012):
Remittances are positively affecting female participation in Albania;
How is this money spent?
Building social network abroad -> increase participation
negatively in Macedonia;
More pronounced role of women as housewives and carers
no relation in Kosovo
Mojsoska-Blazevski et al. (2017):
Remittances are insignificant for female labor-force participation

9. Recent expert-opinion consensus
Divergent results about remittances’ labor-market effect (consensus hardly achieved):
Macedonia: experts - remittances will support inactivity; receivers – employment
Serbia: both groups agreed remittances will support activity, albeit experts – employment, while receivers – self-employment;
Albania and Kosovo: remittances will support activity.

10. Comment welcome. marjan.petreski@uacs.edu.mk