The Nexus of Remittances and Migration: Impacts on Labour Market Dynamics through Bivariate Probit Analysis in Kosovo
The Nexus of Remittances and Migration: Impacts on Labour Market Dynamics through Bivariate Probit Analysis in Kosovo

Summary/Abstract: This study investigates the labour market dynamics in Kosovo, a post-war and transitional economy, which high migration rates and substantial remittance inflows have significantly influenced. Despite the global attention paid to migration and remittances, there is a conspicuous gap in understanding their joint effects on labour markets, par- ticularly in contexts like that of Kosovo. The research aims to analyse the interplay be- tween migration, remittances, and labour force participation in Kosovo, and to identify how these factors collectively affect labour market dynamics across different demo- graphic groups. Utilising 2017 data from the Millennium Challenge Corporation sur- vey, this study employs bivariate probit techniques to address endogeneity issues in mi- gration and remittance patterns. It provides a nuanced analysis of their impacts on la- bour force participation. The findings reveal that remittances can disincentivise labour force participation, contributing to a lower labour supply. This effect is more pro- nounced among certain demographic groups, such as women and the youth. Con- versely, migration strategies have a mixed impact on labour force participation. The study suggests that remittances and migration have significant but complex effects on labour market dynamics in Kosovo. It emphasises that remittances, while bolstering household incomes, may inadvertently dampen labour force participation. This effect, coupled with the nuanced impacts of migration, suggests a need for policies that en- courage the productive investment of remittances in the local economy and support labour market re-entry strategies for return migrants.

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