1. (Master) Ligjerata 10 Metodologjia hulumtuese Metodat kuanitative në hulumtimet shkencore (shembull konkret) Prof.dr. Avdullah Hoti 1 1

2. Qëllimi i ligjëratës
Si aplikohen modelet ekonometrike në hulumtime empirike?
Qasja në përgatitjen e një punimi shkencor për publikim.
Identifikimi i qëllimeve të hulumtimit
Identifikimi i hipotezave
Zgjedhja e modelit ekonometrik
Vlerësimi/testimi i hipotezave
Interpretimi i rezultateve
Të gjitha këto do të diskutohen përmes një shembulli konkret nga një punim i botuar:
Hoti, Avdullah (2009) 'Determinants of emigration and its economic consequences: evidence from Kosova', Southeast European and Black Sea Studies, 9: 4, 435 — 458

3. Determinants of emigration and its economic consequences: evidence from Kosova

4. Labour movements affects the economic prospects of countries involved,
Context of the investigation: Why dealing with emigration and remittances?
Labour movements affects the economic prospects of countries involved,
In the origin country, emigration:
Reduces the size of the labour force,
Changes its skills composition,
Affects aggregate spending due to remittances,
Produces other second and third round effects (multiplier effects).
Around 20% of Kosova’s population is abroad
Annual remittances are estimated at 13% of GDP

5. Research questions
Q1. Given the lack of data, to provide estimates of emigrants from Kosova, their profile and brain drain,
Q2. What determines emigration decisions
Q3. Employment possibilities at home and abroad (as the driving force of emigration)
Q4. Returns to education for emigrations
Q5. Determinants of incidence and size of remittances

6. Estimates of emigrants from Kosova and their profileQ1
Estimates of emigrants from Kosova and their profile
Emigration existed during the socialism,
There is no official data after 1989,
Bush (2004): thousand emigrants,
Moalla-fetini et al. (2005): 470 thousand
Riinvest (2003): 20% of households have at least one member abroad.

7. Q1 Profile of emigrants (based on Riinvest HLFS) 66% males
35% urban residents
compared to 45% of the total population
52% age 25-44
compared to 29% of the total population
61% with higher education
compared to 40% of the total population
49% remit
Average amount remitted per month for those who remit is 347 Euro,

8. Q1

9. Q1

10. Q1 Q1 Estimates of the brain drain in Kosova
Proportion in the total population *
Population
Emigration rate*
Number of emigrants
[1]
[2]
[3]
[4]=[2]x[3]
Total population
1.000
2,400,000**
0.067
160,800
Population of age 25+
0.490
1,176,000***
0.083
97,608
Education level of the population aged 25+
Less than upper-secondary education
0.471
553,896 ***
0.049
27,141
Upper-secondary education
0.405
476,280 ***
0.126
60,011
Higher education
0.124
145,824 ***
0.074
10,791
Source of data:
* Riinvest HLFS of December 2002;
** Estimated by Moalla-Fetini et al. (2005) using the size of the population from the last census of 1981 and assuming a natural growth rate of 2 percent for Albanians and 1.2 percent for other ethnic groups living in Kosova. This estimate includes emigrants.
*** Own calculations by multiplying the respective proportion in the population from column 1 with the total number of population.

11. What determines emigration decisionsQ2
What determines emigration decisions
Theory of migration: why labour moves?
Employment and wage differentials between home and abroad
The effect of:
Personal characteristics
Household characteristics
Contextual characteristics

12. Q2 When a person moves abroad?
Ve and Vs indicate the expected value abroad and at home respectively,
c is the costs of emigration
The dep. variable is discrete, taking values of 1 if abroad and 0 if not:

13. Data Q2 Riinvest Household and Labour force Survey data:
1,252 households are interviewed with 8552 members,
In the estimation, we consider only those of age 16-64:
4,891 observations
Of whom, 431 or 8.8% are abroad

14. Q2 Defining the explanatory variables Explanatory variables Definition
Personal characteristics
Age
Age of the person
Education
Dummies: less than upper-secondary (the omitted), upper-secondary and higher
Marital status
Dummy=1 if married, 0 otherwise
Household characteristics
Household size
Number of household members
Household incomes
€/month per capita without including remittances
Household incomes squared
€/month per capita without including remittances squared
Contextual characteristics
Residence
Dummy=1 if the person is from urban areas, 0 if from rural areas
Regional dummies
Dummies for the 7 main regions (omitted dummy for the Prishtina region)

15. Findings Q2

16. Marginal effects Q3

17. Q3
Q3. Employment possibilities at home and abroad as the driving force of emigration
61% of emigrants aged are employed as compared to 30% of non-migrants,
We investigate the change in the probability of being employed when a person emigrates,
A probit model is estimated: the dependent variable equals 1 if the person is employed in Kosova (in the case of non-migrants) or abroad (in the case of emigrants) and 0 if not.
We use the same sample as in the previous estimations.

18. Definition of variablesQ3
Definition of variables
Education dummies that proxy for the potential wage.
Age and age squared account for work experience and also the changing attitudes toward work with age.
Marital status (dummy that equals 1 if married) controls for the effect of family obligations as well as culture, attitudes and family arrangements regarding employment.
Residence: dummy=1 if abroad

19. Findings Q3

20. Q3
Marginal effects

21. 4. Returns to education for emigrationsQ4
4. Returns to education for emigrations
Wage differentials due to education among emigrants utilising the Mincerian wage equation
The basic Mincerian wage equation (Mincer, 1974) relates the log wage (ln wi) to years of education (Edi) and experience (Expi) and its square (Expi2):
Findings indicate if education obtained in Kosova is rewarded in the foreign market.
The sample consists of employed emigrants aged with non-missing data on monthly wages as reported by the household head in Kosova.

22. Q4 The explanatory variable:
for human capital: education dummies,
work experience:
age and age squared
years of emigration
marital status (a dummy that equals 1 if married)
gender
the country of emigration
We do not have sufficient observations to estimate separate regressions by gender. We only allow for differences in the intercept.

23. Findings Q4

24. Q5. Determinants of incidence and size of remittances
The orthodox theory fails to explain what determines a migrant’s remittances, because it assumes that migration is an individual strategy to maximise income, in which case one would expect to observe zero remittances.
The new economics of migration brings a household perspective to migration decisions, where emigration is a household strategy for allocating labour so as to increase household incomes and reduce the risk

25. Motivation for remittingQ5
Motivation for remitting
The motivations for migrant’s remittances are thought to be similar to motivations for other intra-household transfers.
First, migrants may remit induced by altruistic behaviour, where remittances increase with migrant’s incomes and the degree of altruism and decrease with household incomes.
Second, remittances can also reflect migrants’ desires to diversify their portfolios (Bouhga-Hagbe, 2006).
Third, remittances may be viewed as repayments of loans used to finance migration costs and/or migrant’s human capital.
Finally, migrants may remit to ensure that in the future they will be given rights towards their household’s wealth.

26. Q5
Methodology
We follow the model provided by Funkhouser (1995), where emigrant’s utility function includes the utility of the household left behind:
Where:
Um is the emigrant’s own utility and
Uh is the household utility in the source country (each are dependent on consumption Cm and Ch respectively).
The importance of the utility of the household left behind in the migrant’s own utility U depends on the relationship of the migrant to the household captured by the vector Z.

27. Q5 We investigate: (i) the probability that an emigrant remits
where yi denotes the observed amount of remittances sent home (in €/month) by the emigrant i.
We estimate a probit model:

28. Q5 (ii) determinants of the size of remittances
49% of emigrants aged 16+ remit (i.e. yi>0).
For the rest with yi=0 (corner solution), the dependent variable is a continuous variable, but truncated at zero.
The Tobit model handles the situations when y is characterised by the corner solution
Where
yi* is the latent variable and yi is its observed counterpart,
xi is a vector of explanatory variables expected to affect yi*,
 is the vector of parameters to be estimated

29. Q5 The Tobit model involves estimating
The direction (i.e. the sign) of the effect of explanatory variables xi on yi is the same with regard to Pr(yi>0 | xi) and E(yi | yi>0, xi,).
The marginal effect can be split into two parts.
First, if yi=0, as xi increases then the probability that yi>0 increases.
Second, if yi>0 as xi increases then the mean response of yi increases.

30. Q5
Defining the explanatory variables

31. Findings: the probability of remittingQ5

32. Q5 Marginal effects For a representative male who is:
31 years old,
with higher education,
married,
employed,
from urban areas,
from a household with 10 members,
with household incomes per capita without including remittances at the sample average (€37 per month) and
who has 8 years of emigration,
the probability of remitting is 0.72.
For a similar female, this probability is 0.36.
Doubling the household incomes decreases the probability of remitting by 5 percentage points for males and by 4 percentage points for females.
Increasing the years in emigration by one year ceteris paribus, increases the probability of remitting by 1 percentage point for males and by 2 percentage points for females.

33. Findings: The size of remittances (the Tobit model)Q5

34. Marginal effects (conditional and unconditional)Q5
Marginal effects (conditional and unconditional)
For all emigrants, males remit 42 percent more than females (column 3),
Of those who remit, males remit 32 percent more than females (column 4).
Those who are employed remit 165 percent more than those who are not employed.
Of the emigrants who remit, the employed remit 138 percent more than those who are not employed.
For all emigrants, a 1 percent increase in household incomes is associated with a decrease in remittances by percent ceteris paribus.
Of the emigrants who remit, as the household incomes increase by 1 percent the amount remitted decreases by percent
Finally, for all emigrants an additional year of emigration increases remittances by 3.7 percent,
of emigrants who remit the amount remitted increases by 2.7 percent.

35. Conclusions (1)
We provided evidence on emigration and remittances in Kosova
The likelihood of emigration decreases with age and increases with education and household size.
Some indirect evidence for the positive effect of emigration networks.
Emigration decisions are expected to be driven by the perceived higher chances of employment upon emigration.

36. Conclusions (2)
5. No evidence that education (and experience) obtained in Kosova is rewarded in the foreign labour market.
6. Emigrants who are employed are more likely to remit than the non-employed emigrants.
7. The incidence of remitting and the amount remitted decrease with the household income in Kosova and increase with years of emigration.

37. Conclusions (3)
These findings can be used to provide a better estimation (and forecast) of remittances. This may contribute to better estimation of the consumption and savings by households and therefore improve the national accounts estimates in Kosova.

38. Thank you!