Citation
Dermendzhieva, Zvezda (2009). Migration, Remittances, and Labor Supply in Albania. Center for Economic Research and Graduate Education, Charles University, Prague.Abstract
This paper investigates the effect of international migration and remittances on labor supply in Albania. It attempts to deal with the potential endogeneity problems inherent in this type of analysis by instrumenting for the household migration decision and remittance receipts. After instrumenting, for females and for older males I obtain large and positive coefficients for having a migrant within the family and large and negative coefficients for receiving remittances. The positive effect of migration and negative effect of remittances on labor supply appear significant only for older males aged 46-60. The expected negative effect of remittance receipts on labor supply, among the female population in Albania is not confirmed by the data. The results also suggest that the OLS estimates of the effect of migration are likely biased downwards, while the OLS estimates of the effect of remittances are biased upwards, compared to the true effects of these variables.