Triadic relationship of remittances, migration and labor force

Abstract

Purpose This study aims to investigate the relationship between Kosovo remittances, migration and labor force participation and seeks to uncover how migration and remittances, often considered separately, interact to shape labor market outcomes across gender, age and education groups. Design/methodology/approach To analyze the relationship between remittances, migration and labor force participation, this study leverages multivariate probit (mvprobit) to rectify the endogeneity issue intrinsic from remittances and migration. Utilizing this robust methodological approach allows us to circumvent the limitations traditionally associated with biprobit analysis. The research is grounded in empirical evidence from the Millennium Century Corporation survey in Kosovo. Findings The findings indicate that remittances and migration are pivotal determinants in shaping the contours of labor force participation, particularly influencing disparities across gender, age and educational attainment. Further, this study unearthed intriguing evidence suggesting the disincentivizing effect of remittances on labor force participation, alongside the potentially disruptive influence of prospective migration plans. Originality/value The novelty of this work lies not only in the context-specific insights it provides into the socio-economic fabric of Kosovo—an area that has hitherto received limited scholarly attention—but also in its methodological innovation. The simultaneous application of mvprobit technique provides a nuanced approach to tackle the inherent endogeneity issue, thereby pushing the methodological frontiers of the field.