Open Access Open Access  Restricted Access Subscription or Fee Access

Remittances and Labour Supply Revisited: New Evidence from the Macedonian Behavioural Tax and Benefit Microsimulation Model

Marjan Petreski

Abstract

The objective of the paper is to revisit the role of remittances for labour-supply responses. Previous studies documented conflicting results, while the key methodological concern – remittances’ endogeneity about labour supply – has not been resolved convincingly. We construct behavioural tax and benefit microsimulation model and simulate labour-market responses of singles and couples had remittances not existed in their households. This is a novel methodological approach avoiding the usual trap of utilisation of inappropriate instruments to remittances. Our results suggest that remittances are prevalently associated with lower labour-market activity, especially for women. However, the labour-supply response is found quite feeble and only in single families. Hence, while previous findings are not entirely rebutted, they may have been overstated and are highly dependent on the construct of the receiving household.

Keywords

remittances; labor supply; simulation

Full Text:

PDF

References

Acosta, P. (2006). Labour Supply, School Attendance, and Remittances from International Migration: The Case of El Salvador. World Bank Policy Research Working Paper 3903.

Amuedo-Dorantes, C. and Pozo S. (2006). Migration, Remittances, and Male and Female Employment Patterns. American Economic Review, 96(2):222–226.

https://doi.org/10.1257/000282806777211946

Binzel, C. and Assaad, R. (2011). Egyptian men working abroad: Labour supply responses by the women left behind. Labour Economics, 18(1):S98-S114.

https://doi.org/10.1016/j.labeco.2011.03.002

Damon, A. (2009). Household Labour Allocation in Remittance-Receiving Households: The Case of El Salvador, mimeo.

Dermendzhieva, Z. (2010). Migration, remittances, and labour supply in Albania. CERGE-EI Working Paper.

Dermendzhieva, Z. (2011). Emigration from the South Caucasus: who goes abroad and what are the economic implications? Post-Communist Economies, 23(3):377-398.

https://doi.org/10.1080/14631377.2011.595135

Funkhouser, E. (1992). Migration from Nicaragua: Some Recent Evidence. World Development, 20(8):1209-18.

https://doi.org/10.1016/0305-750X(92)90011-J

Hanson, G.H. (2007). Emigration, Remittances, and Labour Force Participation in Mexico. Integration and Trade Journal, 27:73–103.

Hanson, Gordon H. and Woodruff, C. (2003). Emigration and Educational Attainment in Mexico. UCSD Working Paper, 2003.

Heckman, J.J. (1979). Sample Selection Bias as a Specification Error. Econometrica, 47(1):153-161.

https://doi.org/10.2307/1912352

IMF (2014). Remittances and Economic Development in FYR Macedonia. IMF Country Report No. 14/232.

Jadotte, E. and Ramos, H. (2016). The Effect of Remittances on Labour Supply in the Republic of Haiti. The Journal of Development Studies, 52(12): 1810-1825.

https://doi.org/10.1080/00220388.2016.1156089

Justino, P. and Shemyakina, O.N. (2012). Remittances and labour supply in post-conflict Tajikistan. IZA Journal of Labour & Development, 1(8):1-28.

https://doi.org/10.1111/j.2040-0209.2012.00388.x

Killingsworth, Mark R. (1983). Labour Supply. Cambridge: Cambridge University Press.

https://doi.org/10.1017/CBO9780511572104

Kim, N. (2007). The Impact of Remittances on Labor Supply: The Case of Jamaica. Policy Research Working Paper; No. 4120. World Bank, Washington, DC. © World Bank.

https://doi.org/10.1596/1813-9450-4120

Mojsoska-Blazevski, N., Petreski, M. and Ayhan, O. (2017). National Research on Low Female Labour-Market Participation in Macedonia: Quantitative-based Estimates from a New Survey. Skopje: UN Women.

Mojsoska-Blazevski, N., Petreski, M. and Petreska, D. (2015). Increasing labour market activity of poor, females and informal workers: Let's make work pay in Macedonia. Eastern European Economics, 53(6), p.466-490.

https://doi.org/10.1080/00128775.2015.1103656

Orsini K. (2006). Is Belgium Making Work Pay? CES Working Paper.

Petreski, M. and Jovanovic, B. (2016). Do Remittances Reduce Poverty and Inequality in the Western Balkans? Evidence from Macedonia? In: Dahinden, J., Efendic, A. and Zbinden, M. (eds.) Diversity of Migration in South East Europe. Fribourg, RRPP Joint Volume:85-109.

Petreski, M. and Jovanovic, B. eds. (2013). Remittances and Development in the Western Balkans: The cases of Macedonia, Kosovo and Bosnia-Herzegovina. Scholars' Press.

Petreski, M. and Mojsoska-Blazevski, N. (2015). Youth self-employment in households receiving remittances in Macedonia. Czech Journal of Economics and Finance, 65(6):499-523.

Petreski, M. and Mojsoska-Blazevski, N. (2017). Overhaul of the social assistance system in Macedonia: Simulating the effects of introducing Guaranteed Minimum Income (GMI) scheme. Finance Think Policy Study 11.

Petreski, M., Petreski, B. and Tumanoska, D. (2017). Remittances as a Shield to Socially-Vulnerable Households in Macedonia: The Case When the Instrument is Not Strictly Exogenous. International Migration, 55(1):20-36.

https://doi.org/10.1111/imig.12279

Petreski, M., Petreski, B., Tumanoska, D., Narazani, E., Kazazi, F., Ognjanov, G., Jankovic, I., Mustafa, A. and Kochovska, T. (2017). The Size and Effects of Emigration and Remittances in the Western-Balkans: Forecasting Based on a Delphi Process. Südosteuropa: Journal of Politics and Society, 65(4), p. 679-695.

Rodriguez, E.R. and Tiongson, E.R. (2001). Temporary Migration Overseas and Household Labour Supply: Evidence from Urban Philippines. International Migration Review, 35(3):708-725.

https://doi.org/10.1111/j.1747-7379.2001.tb00037.x

Rudi, J. (2014). Remittances and Labor Supply: The Case of Kosovo. Working Paper.

Saez. E. (2010). Do Taxpayers Bunch at Kick Points? American Economic Journal: Economic Policy, 2:180–212.

https://doi.org/10.1257/pol.2.3.180

Sharma, A. and Cardenas, O. (2018). Remittances and Labor Market Outcomes: Evidence from Mexico. International Labour Review. 157(2):193-212.

https://doi.org/10.1111/ilr.12035

Urama, N. E., Nwosu, E.O., Yuni, D.N. and Aguegboh, S.E. (2017). International Migrant Remittances and Labour Supply in Nigeria. International Migration, 55(1), p.37–50.

https://doi.org/10.1111/imig.12289

Van Soest, A. (1995). Structural models of family labour supply: A discrete choice approach. Journal of Human Resources, 30:63-88.

https://doi.org/10.2307/146191

Refbacks

  • There are currently no refbacks.