+ All Categories
Home > Documents > Unlock Research Proposal format

Unlock Research Proposal format

Date post: 14-Apr-2018
Category:
Upload: ali
View: 223 times
Download: 0 times
Share this document with a friend

of 21

Transcript
  • 7/29/2019 Unlock Research Proposal format

    1/21

    1

    UNIVERSITY OF TRENTO

    CIFREM

    INTERDEPARTMENTAL CENTRE FOR RESEARCH TRAININGIN ECONOMICS AND MANAGEMENT

    DOCTORAL SCHOOL IN ECONOMICS AND MANAGEMENT

    Micro Impacts and Macro Determinants of Remittances: a Study of Albania

    PhD Thesis Proposal

    Ermira Hoxha Kalaj

    January 2010

    During the last two decades, South-East European countries and in particular Albania have experienced alarge increase in the number of people migrating to more developed countries. With a large portion of theirpopulation abroad, these countries are highly dependent on remittances, which in the case of Albania farexceed Foreign Direct Investments.

    Using household survey data for Albania, the study will first model decision-making in remittance-receiving households and compare with non-remittance-receiving households. The focus of the first section

    will be on human capital investment and the second section on labour market participation.In the third section the macro determinants will be estimated, in order to better understand thedynamics of remittances in Albania and neighbouring countries. A gravity-type equation will beused to assess to what extent remittance flows respond to key macroeconomic variables such asstock of migrants, dependency ratios, stock market returns, exports, and imports.

  • 7/29/2019 Unlock Research Proposal format

    2/21

    2

    INTRODUCTION

    As labour markets become internationalized and people increasingly migrate to find work,

    remittances have grown dramatically from $3 billion in 1975 to close to $370 billion in 2007

    (World Bank, 2008). Remittance flows, funds received from migrants working abroad, are

    enormously important as a source of income in many developing countries (Giuliano and Ruiz-

    Arranz, 2005; Mundaca, 2005), and this dramatic growth has clearly had important implications for

    poverty reduction (Adams and Page, 2003), economic growth (Solimano, 2003) and financial

    development (Aggarwal, Demirguc-Kunt and Peria, 2006). Several studies have suggested that

    remittances are the second largest source of external finance for developing countries after Foreign

    Direct Investments (FDI), both in absolute terms and as a proportion of GDP. Relative to capital

    flows, remittances tend to be stable and to increase during periods of economic downturns and

    natural disasters (Yang, 2006). While a surge of inflows, including aid flows, can erode a countrys

    competitiveness, remittances do not seem to have this adverse effect. One explanation of why

    remittances may not lead to significant loss of competitiveness is that they tend to dry up if

    exchange rates become overvalued (Rajan and Subramanian, 2005).

    Since the fall of the Berlin Wall, migration from Eastern Europe, including the Balkans, has

    increased sharply. According to World Bank estimates, in 2005 Albania was the fourth-ranked

    country in the world in terms of share of emigrants in relation to population, with 27.5 percent of

    Albanians living abroad, mostly in Greece and Italy. In 2006, remittances were 13 percent of

    Albanias GDP, exceeding more than three times both the FDI and the total amount of development

    aid received by the country. This extraordinary volume of migration and remittances is likely to

    have had extensive consequences for the Albanian economy.

    In their review of the existing literature, Rapoport and Docquier (2005) argue that

    remittances have short-run economic benefits and may have long-run implications for households

    labour supply decisions, education opportunities for offspring, and investments in household

    businesses. My research project aims to enhance understanding of the effect of remittances in

  • 7/29/2019 Unlock Research Proposal format

    3/21

    3

    education and labour market participation and to examine the macro determinants of these flows to

    Albania.

    LITERATURE REVIEW

    Remittances have been examined from both micro and macro prospectives. Microeconomic theory

    treats remittances as a household issue. The empirical literature on the microeconomics examines

    the patterns of remittances and the motivatons for making them but also the impact they have on the

    labour market participation and on family consumption. The macroeconomic literature on the other

    hand concentrates on how remittances respond to key macroeconomic variables such as stock of

    migrants, dependecy ratios, stock market returns, exports, imports and on macro effects that

    remittances have in recipient countries.

    1. Remittances and education

    The relationship between remittances and education has been explored in the literature by focusing

    on the impact of remittances on the education of household members. Of particular concern for the

    process of economic development is how migration affects household investments in human capital.

    The empirical findings about the impact of remittances on educational attainment are

    ambiguous. The extra income from remittances may allow children to delay entering the workforce

    in order to further their studies. However, the departure of wage earners from a household may

    disrupt family life. Migration may reduce the number of adult role models in the home and may

    increase the demand on older children to assist in running and supporting the household. These

    effects may make it more difficult for children to remain in school. Thus, migration may increase or

    decrease household investment in childrens schooling (Hanson and Woodruff, 2003).

    A few studies have looked for evidence on the potential forward linkage between

    remittances and education. These studies represent an encouraging step toward documenting the

  • 7/29/2019 Unlock Research Proposal format

    4/21

    4

    potential growth effects of remittances through human capital formation.1 Hanson and Woodruff

    (2003) employ a reduced-form approach to estimate the effect of remittances on childrens

    schooling and health in Mexico. They find a positive relationship between child education and

    having a family member abroad and argue that remittances are the mechanism that links the two.

    They control for the potential endogeneity of having a migrant family member by using historical

    state migration rates and household characteristics.

    Cox-Edwards and Ureta (2003) reach similar conclusions about the impact of remittances in

    El Salvador. Their estimates of survival functions show that remittances significantly contribute

    to lowering the hazard of school leaving in El Salvador using cross-sectional data collected in 1997.

    One problem with this study is that it does not address potential sample selectivity issues and

    endogeneity of remittances. Thus, the findings could be tested using alternative econometric

    techniques.

    Using data for some countries of Latin America, Acosta et al. (2007) examines the effects of

    remittances on age-based demographic sub-groups. The evidence in this study suggests that girls

    and boys between 11 and 14 years of age seem to benefit from remittances in terms of higher

    enrolment rates, but this positive impact does not apply to boys between 15 and 17 years of age.

    Acosta et al. (2007) concludes that remittances are used as a substitute for child labour, a practice

    usually associated with higher school dropout rates.

    In his study of the Philippines, Yang (2005) finds that remittances cause only minor

    improvements in school attendance for children between 10 and 16 years of age, but an increase of

    remittances equivalent to 10 percent of household income leads to a 10 percent increase in the

    attendance for boys between 17 and 21 years of age.

    The conflicting findings on the impact of remittances on education suggest that this

    relationship may vary by context and age and needs to be further investigated.

    1 This is assuming that human capital formation is good for growth.

  • 7/29/2019 Unlock Research Proposal format

    5/21

    5

    2. Remittances and labor market participation

    Remittances can increase consumption or stimulate investments in economies with liquidity

    constraints (Reilly and Castaldo, 2007; Woodruff and Zenteno, 2001). One of the first studies that

    examined the consequences of remittances on home countries2 is Funkhouser (1992), who finds that

    in Nicaragua that remittances increase self-employment for men and reduce the labour supply of

    women. However, from a development perspective, a decline in the labour supply in the recipient

    families should not necessarily be viewed as a negative effect. For instance, women in remittance-

    receiving households may carry out both parenting and home production activities (Acosta, 2006).

    Since remittance inflows are simple income transfers, recipient households may rationally

    substitute unearned remittance income for labor income. Regardless of their intended use,

    remittance transfers may be subject to moral hazard problems (Chami et al., 2003). These problems

    may induce recipients to divert resources to the consumption of leisure, thereby reducing their labor

    market effort. There are cases in which members of remittance-receiving families reduce their labor

    market participation in Pakistan (Kozelt and Alderman, 1990) and in Caribbean Basin cities

    (Itzigsohn, 1995)

    The impact of remittances on the decision to work has been examined by Rodriguez and

    Tiongson (2001) in Manila. Without accounting for the endogeneity of remittances with respect to

    labour supply, they conclude that remittances reduce employment. Using 2002 data from Mexico,

    Amuendo-Dorantes and Pozo (2006) show that remittances appear to negatively affect female work

    effort only in rural areas and in the informal sector. Additionally, their results indicate that

    remittance-receiving men do not reduce their participation in labor market, but tend to shift into

    informal employment. Their study acounts for the endogeneity of remittance income and examines

    differences in the hours worked in various types of employment by men and women in urban and

    rural areas.

    2 Home countries are the countries of origin of the migrants.

  • 7/29/2019 Unlock Research Proposal format

    6/21

    6

    Using household survey data from Moldova, Grlich et al. (2007) examine labour market

    inactivity by considering three potential explanations: a disincentive effect in which leisure is

    considered a normal good and non-labour income raises the reservation wage of a potential worker;

    a labour subtitution effect, in which people in remittance-reciving households allocate more time to

    household production than their counterparts in the non-remittance-reciving households; an

    education effect, in which migration provides incentives for additional education3 and remittances

    are used to invest in the education of those remaining at home.

    There are few empirical studies of the relationship between remittances and labour market

    issues in Albania. Konica and Filer (2009), using Albanian Living Standards Measurement Survey

    (LSMS) for 1996, suggest that remittances have a negative effect on female labour market

    participation due to higher income from abroad. This finding is consistent with studies conducted in

    other countries. In the Albanian case however, Konica and Filer (2009) find that neither the

    existence of emigrants in the household nor the amount of remittances received has an effect on

    labour force participation of Albanian males.

    Using data from the 2005 Albanian LSMS Kilic et al. (2007) measure the impact of past

    migration experience of Albanian households on non-farm business ownership through instrumental

    variables regression techniques. These results indicate that households past migration experience

    exerts a positive impact on the probability of owning a non-farm business. Using the same dataset,

    Dermendzhieva (2009) investigates the effect of migration and remittances on labour supply in

    Albania. A linear probability model is estimated for the probability of a household member to be

    working on the subsamples of male and female household members separately. Only after using the

    instrumental variable, Dermendzhieva (2009) obtains large and negative coefficients for receiving

    remittances for females and older males.

    To date the studies on Albania have focused mainly on the decision to work and have not

    considered that remittances may change the hours worked or the type of work performed in the

    3 A phenomenon stressed by the brain gain literature

  • 7/29/2019 Unlock Research Proposal format

    7/21

    7

    receiving economy, without altering employment rates. Hence, by focusing on work performance a

    clearer picture of the allocation of labour supply across different types of employment can be

    established.

    3. Determinants of the remittances

    Studies of why migrants remit to their family members left at home have examined either micro or

    macro determinants.

    From a theoretical viewpoint, three micro motives have been suggested to explain these

    transfers (Rapoport and Docquier, 2005). The first motive involves altruism, meaning that migrants

    care for those left behind. The second motivation entails an exchange where migrants remit for

    services provided by the recipients4. A third motive involves familial interactions. This may take the

    form of an insurance contract that protects its members against shocks, but remittances may also be

    a loan repayment for the costs of migrants education and/or emigration (Rapoport and Docquier,

    2005).

    The New Economics of Labour Migration (Stark and Bloom, 1985) hypothesis states that

    due to market failures in the home country, a household member migrates to another labour market,

    entering a type of co-insurance agreement with the household members left behind. Remittances

    are sent home when the household experiences shocks and enables the household to invest in new

    enterprises.

    Empirical studies must be innovative in measuring the different determinants of remittances

    because it is difficult to separate other motives from altruism. Remittances, according to Rapoport

    and Docquier (2005), combine five components; altruism, repayment of loan, insurance, inheritance

    and exchange of services. This complex mixture of motives has been best described by Andreoni

    (1989) as impure altruism and Lucas and Stark (1985) as enlightened selfishness.

    4 Similar evidences ranging from pure altruism to self-interest are presented in the case of Botswana (Lucas and Stark,1985).

  • 7/29/2019 Unlock Research Proposal format

    8/21

    8

    Zanker and Siegel (2007) seek to empirically test the theoretical motives to remit in Albania

    and Moldova using Tobit models. Although these countries are rather similar in terms of social and

    political background, they are characterized by different patterns of remitting. Zanker and Siegel

    (2007) find evidence for self-provided insurance, inheritance and altruism in the case of Albania.

    For Moldova, they find significant results for the loan repayment motive with regard to the

    repayment of migration loans.

    The empirical macroeconomic literature usually focuses on the number of workers, wage

    rates, and the economic situations in host and home countries, exchange rates and interest rates,

    political risks and the infrastructure for transferring funds. The stock of migrant workers in a host

    country is considered to be an obvious determinant of remittances: Freund and Spatafora (2005)

    estimate that a doubling of the stock of migrants would lead to a 75 percent increase in recorded

    remittances.

    Economic policies and institutions in the home countries like exchange rate restrictions and

    black market premiums may discourage remittances from being sent and also shift remittances from

    the formal to the informal sector (El-Sakka and McNabb, 1999).

    Using data collected over the period 2002-04 by the World Bank, Duval and Wolff (2009)

    provide evidence on the patterns of remittances in Albania. The authors rely on random and fixed-

    effects discrete-choice models to study both the determinants of remittances sent by household

    members living abroad and their implications on the living standards of the recipients. According to

    Duval and Wolff (2009), transfers are negatively correlated with both the senders and recipients

    levels of education. Remittances have a positive impact on indicators like satisfaction with current

    situation, adequateness of food consumption, and purchase of durable goods.

    The analysis of the determinants of remittances can focus not only on variables associated

    with the migrants home country but also on variables related to the migrants host countries and

    variables that describe the relationships between the two. An appropriate approach for analysing

    these variables is the gravity model which has been used by Lueth and Ruiz-Arranz (2006).

  • 7/29/2019 Unlock Research Proposal format

    9/21

    9

    4. Macro evidence about remittances

    Most studies have found that remittances help families to survive poverty, undertake property

    investment, access better education and healthcare, and finance small business activities. As

    household consumption and investment agregate to the national level, remittances should have an

    impact at the macro level .There are several studies that show the impact of remittances on poverty,

    growth, education, financial development, and entrepreneurship.

    Research on the impact of remittances on poverty using household data suggests that these

    transfers help reduce the level of poverty, but have an even greater influence on its severity (Adams,

    2004) and on the poverty gap (Taylor, Mora, Adams, 2005). The finding that remittances help

    reduce poverty has been confirmed in cross-country studies. Based on a dataset of 74 low and

    middle-income developing countries, Adams and Page (2003) find that remittances have a

    statistically significant impact on reducing poverty.

    Remittances have also been shown to promote enterpreneurship (Woodruff and Zenteno,

    2001; Yang, 2005). The macroeconomic impact of a large-scale inward remittances is positive for a

    small open economy, as in the case of Tajikistan (Kireyev, 2006). Remittances have a significant

    impact on bank deposits and credit to GDP and promote financial development (Aggarwal,

    Demirguc-Kunt and Peria, 2006).

    Research on the effect of remittances on economic growth has been scant and has yielded

    mixed results. Using a panel of 113 countries over three decades, Chami et al. (2003) find that

    remittances are negatively associated with economic growth. On the other hand, Solimano (2003)

    finds a positive association between remittances and growth for a panel of Andean countries.

    Giuliano and Ruiz-Arranz, (2005) and Mundaca, (2005) suggest that the impact of remittances on

    growth depends on the level of financial development.

  • 7/29/2019 Unlock Research Proposal format

    10/21

    10

    RESEARCH QUESTIONS

    Most studies have focused on the impact of migration on the livelihood of migrants themselves,

    while less research has been done on those household members who remain behind. The overall aim

    of this project is to examine the impact of remittances on households decisions in terms of

    education and labor market participation and to examine the macroeconomic determinants of

    remittances. The focus will be on three sets of variables those associated with migrants home and

    host countries, and those involving the relationship between the two.

    The analysis will be conducted in three stages. In the first two, the dissertation will adopt a

    microeconomic prospective. The money that migrants send back home is likely to become an

    important factor in their households budget. This part of the dissertation will present evidence on

    the economic effects of international remittances on the education and labour market participation

    of household members.

    Initially, the study will focus on the relationship between household migration behaviour

    and educational attainment in Albania. The question is whether children who live in households

    with external migrants complete more grades of school at a given age than do other children.

    Sending migrants abroad may generate remittances that raise household income and allow children

    to complete more schooling, but it may also disrupt family life in a manner that hinders childrens

    progress at school. Remittances can not only increase physical investment, they can also expand

    human capital accumulation, such as health and education.

    The second part will examine the labour markets dynamics due to the presence of

    remittances. According to the neoclassical model of labour-leisure choice (Killingsworth, 1983)

    remittances, a source of non-labour income, may lift budget constraints, raise reservation wage and

    through an income effect, reduce the likelihood of employment and the number of hours worked by

    members of remittance-receiving households. Thus the second question will be on the effects of

    remittances on the labour market participation of the head and other members of the household.

  • 7/29/2019 Unlock Research Proposal format

    11/21

    11

    In the third part, the macroeconomic determinants will be estimated in order to better

    understand the dynamics of remittances in the South-East European countries. The dissertation will

    use a gravity-type equation to try to asses to what extent workers remittances are responsive to key

    macroeconomic variables such as stock of migrants, dependency ratio, stock market return, exports,

    and imports.

    My research focus will be on EU members such as Romania and Bulgaria and non-members

    such as Croatia, Serbia and Montenegro, Bosnia and Herzegovina, Albania. These countries have

    been among the top 10 remittance recipients in ECA5 countries during 2006-2007, according to the

    World Bank (2008). Remittances represent over 20 percent of GDP in Moldova and Bosnia and

    Herzegovina, and over 10 percent in Albania, and 5 percent for the remaining countries. Some of

    these countries are considered to be in transition and their economies are in need of both

    structurable changes and development. A series of factors may influence the decision to migrate

    such as poverty rate, freedom to move, or EU membership. All these factors may affect either

    remittance inflows or labor market structure in home countries.

    5 European and Central Asia Countries

  • 7/29/2019 Unlock Research Proposal format

    12/21

    12

    RESEARCH DESIGN

    In the first and second sections, this study will use case study analysis to investigate the

    microeconomic impacts of remittances. The third section aims to estimate the macro determinants

    of remittances and will make a comparison between Albania and other neighbouring countries.

    1. Remittances and human capital investment

    To examine the impact of remittances on educational attainment, my question is whether members

    of remittance-receiving households complete more years of schooling than those living in non-

    remittance-receiving households. A significant fraction of remittances are sent to low income

    families. An interesting question is whether this increasing source of income has had an impact on

    human capital accumulation decisions.

    According to the literature, there is an ambiguous relationship between remittances and

    schooling. In the case of Mexico (Hanson and Woodruff, 2003), there is a small positive effect of

    remittances on schooling only for children living in cities with fewer than 2,500 inhabitants and

    with mothers who have low levels of education. Cox and Ureta (2003) estimate a Cox proportional

    hazard model to examine the effect of remittances on schooling. They find that remittances in El-

    Salvador have a large and significant impact on school retention of individuals from 6 to 24 years

    old. Other studies that find similar results are Funkhouser (1992) and Yang (2004). The marginal

    effect of receiving remittances suggests that recipient households are more likely than non-recipient

    households to keep children at school.

    In order to characterize the remittance-receiving households, it is important to determine

    their position in the income distribution. There are important costs associated to the act of

    migrating, so it is possible that migrants do not come from the lowest quintiles of the income

    distribution and therefore that remittances do not flow toward the poorest. It is possible that the

    lowest income people are less likely to migrate and they receive fewer remittances. This situation is

  • 7/29/2019 Unlock Research Proposal format

    13/21

    13

    more likely to occur in rural areas where poverty rate is higher and in general educational

    achievements are lower than in urban areas.

    The investment in education model of Becker (1974) states that families take into

    consideration their education rate of return and its cost, in order to choose the optimal education

    level of their children, consequently in this model a range of factors may influence the educational

    attainment. If families have financial constraints the level of schooling for their children will be

    lower than optimal. By relaxing the households liquidity constraints, remittances from abroad may

    facilitate investments in education.

    The empirical framework that will be used to capture the effect of remittances in human

    capital investment is the proportional hazard model, (Cox-Edwards and Ureta, 2003):

    { }'exp*)()( 0 ixthth =

    where )(0 th is the baseline hazard of leaving school after grade t, which is left unspecified and is

    estimated; 'ix is a vector of covariates such as; childs characteristics, local conditions, parental

    schooling, household income and presence of remittances; and is the vector of parameters to be

    estimated.

    The crucial assumption in the proportional hazard model is that the effect of the covariates is

    proportional over the entire base line. In the model household incomes are divided from remittances

    in order to identify if income from remittances have the same effect as household income from

    work in the decision to invest in more years of schooling for children. As mentioned in the literature

    review section, Cox-Edwards and Ureta (2003) do not address potential sample selectivity issues

    and endogeneity of remittances. Therefore, in my study I will concentrate in addressing these

    issues.

    Previous evidence on Mexico has suggested that the positive effects of remittances on

    schooling are inversely correlated with the educational attainment of the childrens parents.

  • 7/29/2019 Unlock Research Proposal format

    14/21

    14

    Differential effects of this sort could be due to the fact that among poorer households with lower

    levels of schooling (adult), remittances may have a more sizable effect in terms of relaxing budget

    constraints. However, one can also expect an opposite effect with remittances having a smaller

    impact on education when schooling of parents is low, if less educated parents exhibit lower

    preferences for educational over other alternative expenditures.

    Findings about the relationship between remittances and schooling have fundamental policy

    implications. Demonstrating that remittances have an impact on schooling, we would provide

    support for Government fund to be transferred to poor households in order to enhance educational

    attainment. Another policy implication of a positive effect of remittances on education levels is a

    support for reduction in the transaction costs of remittances.

    2. Remittances and labour market participation

    This part of my study will focus on the relationship between migration and labour market

    participation of members remaining at home. Theoretically, there are two possibilities; the first

    involves the loss of the earner in the household which may lead to increased work by others; the

    second involves the reduction of the work of the remaining members due to the increase in the

    household incomes from remittances. The size of these two effects is likely to differ by gender and

    location.

    Using data for Albania Konica and Filer (2009) find that neither the existence of migrants

    nor the amount of remittances received have an effect on the labour market participation of males.

    Their findings suggest that migrants higher earnings abroad contribute to the development of

    household-owned businesses. Similar to Kilic et al. (2007), Dermendzhieva (2009) uses an

    instrumental variable approach in order to deal with the potential endogeneity of migration and

    remittance flows.

    These focus mainly on the probability of working and do not consider that remittances may

    change hours worked and type of work.

  • 7/29/2019 Unlock Research Proposal format

    15/21

    15

    The following model (Amuendo-Dorantes and Pozo, 2006) will be used to estimate the

    effect of remittances on the hours worked in the home country:

    iiiiZRY +++= 210

    ( )2,0 Normali

    where the vector Ymeasures hours worked;R captures average remittance income;Zis a vector of

    exogenous explanatory household and individual level variables.

    Remittances may be endogenous and their coefficient estimate biased, so it is important to check for

    endogeneity problems. The model will help to quantify the magnitude of the effect of remittances

    on labour market participation and the direction of this impact.

    3. Macro determinants of remittances

    This section will employ a cross-country study to examine the macroeconomic determinants of

    remittances. The empirical framework will be based on a gravity model, which is often used to

    explain international trade flows. Gravity models have also been applied to explain FDI flows

    (Demekas et al., 2005) and migration flows (Gupta and Mody, 2006).

    The remittances from countryj to country i at time t will be modelled using the following

    specification (Lueth and Ruiz-Arranz, 2006):

    ijttijtijjtitijt

    XDcapGDPcapGDPR ++++++='

    43210

    ln/ln/lnln

    where

    Rijt = total amount of remittances received by country I from country j at time t

    GDPit/cap = GDP per capita of country i at time t

    GDPjt/cap = GDP per capita of country j at time t

    Dij = physical distance between two countries

    Xijt = vector of potential factors influencing remittance flows

  • 7/29/2019 Unlock Research Proposal format

    16/21

    16

    t = time effects

    The vector X of the potential factors will include stock of migrants, dependency ratio, stock market

    returns, exports, imports, and others still to be decided.

    Why a gravity model? Because it is a mathematical theory that can be used to predict the

    amount of interaction between two countries, in relation to the distance between them. The project

    will use it to analyse this interaction in terms of migration flows and remittances. Dependent

    variables such as remittances and migrants will be explained by size factors such as GDP, gravity

    factors such as distance and other economic and political variables, some of them qualitative. From

    the empirical results of the last group of variables it will be possible to obtain evidence on the

    motives to remit.

    Data sources

    For the questions regarding the micro impact of remittances the data will be extracted from the

    Albanian Living Standard Measurement Survey (LSMS). This survey was carried out by the

    Albanian National Institute of Statistics with the technical assistance of the World Bank. The LSMS

    project is an international effort supported by the World Bank in order to improve the quality of

    household survey data for policy needs. The survey contains a wide range of information on aspects

    related to the living conditions in Albania at the individual, household and community level. For the

    purpose of the survey, remittances are defined as money received by households in the past 12

    months prior to the survey in the form of cash or in-kind from someone who does not live in the

    household e.g. child or other relative in Albania or abroad. Remittances are valued in Lek and one

    concern is the monetary measurement error due to currency exchange. The survey contains

    information relative to labour force participation and also private transfers (not only remittances),

    which can address issues in the second part of the dissertation.

    The main data source on remittances for the macro chapter will be the IMF balance of

    payments statistics, which report aggregate inward and outward flows. GDP data will be drawn

  • 7/29/2019 Unlock Research Proposal format

    17/21

    17

    from the international financial statistics dataset of the IMF, International Financial Statistics,

    Direction of Trade Statistics and Annual Report on Exchange Arrangement and Exchange

    Restrictions. Additional data such as dependency ratios will be taken from the World Development

    Indicators, and the stock of migrants from International Migration Dataset.

  • 7/29/2019 Unlock Research Proposal format

    18/21

    18

    TENTATIVE CHAPTER OUTLINE

    1. Introduction

    1.1. Research Objectives

    1.2. Organization of the Project

    2. Remittances and human capital investment

    2.1. Related literature

    2.2. Conceptual framework

    2.3. Remittance-education Model

    2.3.1. Remittance-education Equation

    2.3.2. Data2.3.3. Computation Techniques

    2.4. Discussion of the Results

    3. Remittances and labour market participation

    3.1 Related literature

    3.2. Conceptual framework

    3.3. Labour market participation in presence of remittances Model

    3.3.1. Remittance-Labour market participation Equation

    3.3.2. Data

    3.3.3. Computation Techniques

    3.4 Discussion of the Results

    4. Macro determinants of remittances

    4.1. Related literature

    4.2. Conceptual framework4.3. Remittance Model

    4.3.1. Gravity-Type Equation

    4.3.2. Data

    4.3.3. Computation techniques

    4.4. Discussion of the results

    5. Overall Findings and Conclusions

  • 7/29/2019 Unlock Research Proposal format

    19/21

    19

    References:

    Acosta, Pablo (2006): Labor Supply, School Attendance, And Remittances From InternationalMigration: The case of El Salvador, World Bank Policy Research Working Paper 3903,Washington DC: World Bank.

    Acosta, Pablo, Pablo Fajnzylber and Lopez J. Humberto (2007): The Impact of Remittances onPoverty and Human Capital: Evidence from Latin American Household Surveys, World

    Bank Policy Research Working Paper4247, Washington DC: World Bank.

    Adams, Richard and John Page (2005): Do International Migration and Remittances ReducePoverty in Developing Countries?, World Development 32: 1407-1417.

    Aggarwal, Reena and Andrew W. Horowitz (2002): Are International Remittances Altruism orInsurance? Evidence from Guyana, Using Multiple-Migrant Households, World

    Development30 (11); 2033-44.

    Aggarwal, Reena, Asli Demirguc-Kunt, and Maria Soledad Martinez Peria (2006): Do WorkersRemittances Promote Financial Development?, World Bank Policy Research Paper 3957,Washington DC: World Bank.

    Amuedo-Dorantes, Catalina and Susan Pozo (2006): Migration, Remittances, and Male andFemale Employment Patterns, The American Economic Review 96: 222-226.

    Anderson, James E. (1979): A Theoretical Foundation for Gravity Equation, American EconomicReview, 69(1): 106-116

    Andreoni, James (1989): Giving with Impure Altruism: Applications to Charity and RicardianEquivalence. Journal of Political Economy, 105(6): 1121-1166.

    Becker, Gary (1991): A Treatise on the Family Enlarged Edition Cambridge, Harvard UniversityPress.

    Chami, Ralph, Fullenkamp Connel and Jahjah Samir (2003): Are Immigrant Remittance Flows aSource of capital for Development, IMF Working Papers 03/189, Washington, InternationalMonetary Fund.

    Cox-Edwards, Alejandra and Manuelita Ureta (2003): International Migration, Remittances, andSchooling; Evidence from El Salvador,Journal of Development Economics 72: 429-461

    Demekas, Dimitri, B. Horvath, El. Ribakova and Y.Wu (2005): Foreign Direct Investment inSoutheaster Europe: How (and How much) can Policies Help?, IMF Working Paper 05/110,Washington, International Monetary Fund.

    Dermendzhieva, Zvezda (2009): Migration, Remittances, and Labor Supply in Albania, Centerfor Economic Research and Graduate Education, Charles University, Prague

    Duval, Laetitia and Francois-Charles Wolff (2009): Remittances Matter: Longitudinal Evidence

    from Albania, Institut dEconomie et de Management de Nantes.

  • 7/29/2019 Unlock Research Proposal format

    20/21

    20

    El Sakka and Robert McNabb (1999): The Macroeconomic Determinants of EmigrantRemittances, World Development, 27 (8): 1493-1502

    Freund, Caroline, and Nikola Spatafora (2005): Remittances, Transaction Costs, Determinants, andInformal Flows. World Bank Policy Research Working Paper3704, Washington DC: World

    Bank.

    Funkhouser, Edward (1992): Migration from Nicaragua: Some Recent Evidence WorldDevelopment, 20: 1209-1218

    Funkhouser, Edward (1995): Remittances from International Migration: A comparison of ElSalvador and Nicaragua,Review of Economics and Statistics, 77(1): 137-146.

    Giuliano, Paola and Marta Ruiz-Arranz (2005): Remittances, Financial Development, andGrowth., IMF Working Paper 05/234, Washington, International Monetary Fund.

    Grlich, Dennis, Makmoud, Toman O., and Christoph Trebesch (2007): Explaining Labor MarketInactivity in Migrant-Sending Families: Housework, Hammock, or Higher Education? KielInstitute for World Development, Working Paper 1391.

    Gupta, Poonam (2005): Macroeconomic Determinants of Remittances; Evidence from India, IMFWorking Paper 05/224, Washington, International Monetary Fund.

    Hanson, Gordon and Christopher Woodruff (2003): Emigration and Educational Attainment inMexico, mimeo, University of California, San Diego

    Itzigsohn, Jose (1995): Migrant Remittances, Labor Markets, and Household Strategies: Acomparative Analysis of Low Income Household Strategies in the Caribbean Basin, SocialForces, 74: 633-55.

    Kilic, Talip, Carletto, Calogero, Davis, Benjamin, and Alberto Zezza (2007): Investing BackHome: Return Migration and Business Ownership in Albania, World Bank ResearchWorking Paper series 4366, Washington DC: World Bank.

    Kireyev, Alexei (2006): The Macroeconomics of Remittances: The Case of Tajikistan, IMFWorking Paper 06/2, Washington DC: World Bank.

    Kozel, Valeri and Harold Alderman (1990): Factors Determining Work Participation and LaborSupply Decision in Pakistans Urban Areas, Pakistan Development Review, 29: 1-18.

    Lucas, Robert E. B. and Oded Stark (1985): Motivations to remit: Evidence from Botswana,Journal of Political Economy, 93: 901-18.

    Rajan, Raghuram and Arvind Subramanian (2005): What determines aids impact on growth?,IMF Working Paper 05/126, Washington, International Monetary Fund.

    Rapoport, Hillel and Docquier Frederic (2005): The Economics of Migrants Remittances, IZADiscussion Paper, 1531

  • 7/29/2019 Unlock Research Proposal format

    21/21

    Rodriguez, Edgard R. and Erwin Tiongson (2001): Temporary Migration Overseas and HouseholdLabor Supply: Evidence from Urban Philippines, International Migration Review, 35: 709-725

    Solimano, Andres (2003): Remittances by emigrants: Issues and Evidence WIDER Discussion

    Paper 2003/89.

    Strark, Oded and David E. Bloom (1985): The New Economics of Labour Migration, AmericanEconomic Review, papers and proceedings, 173-178.

    Taylor, J. Edward, Jorge, Mora, Richard, Adams and Alejandro Lopez-Feldman (2005):Remittances, Inequality, and Poverty: Evidence from Rural Mexico., mimeo, University ofCalifornia.

    Woodruff, Christopher and Rene Zenteno (2007): Migration Network and Microenterprises inMexico,Journal of Development Economics, 82: 509-528.

    Wooldridge, Jeffrey M. (2002): Econometric Analysis of Cross Section and Panel Data, the MITPress, Cambridge Massachusetts.

    World Bank, 2009:Migration and Remittances Factbook 2008.

    Yang, Dean (2005): International Migration, Human Capital, and Entrepreneurship: Evidence fromPhilippine Migrants Exchange Rate Shocks, World Bank Policy Research Working Paper3578, Washington, World Bank.

    Zanker-Hagen, Jessica and Siegel Melissa (2007): The Determinants of Remittances: AComparison between Albania and Moldova, Maastricht Graduate School of Governance.Working Paper.


Recommended