Youth Self-Employment in Households Receiving Remittances in Macedonia

29 Pages Posted: 19 Nov 2014 Last revised: 12 Jul 2018

See all articles by Marjan Petreski

Marjan Petreski

University of American college - Skopje - School of Business Economics and Management

Nikica Mojsoska-Blazevski

University of American College, Skopje - School of Business Economics and Management

Maja Ristovska

University American College Skopje (UACS)

Edi Smokvarski

University American College Skopje (UACS)

Date Written: November 18, 2014

Abstract

The objective of this study is to investigate whether youth in households receiving remittances in Macedonia have a higher probability of establishing their own business. In addition, we investigated whether the effect of remittances on youth labour supply is homogenous across the genders and across ethnic and rural/urban divides. We used the DotM 2008 Remittance Survey and the instrumental variables approach to address the potential endogeneity of remittances with respect to the self-employment status. Two instrumental variables were used which affect remittances, but not the decision to be self-employed, except through remittances: a non-economic motive to migrate, and the existence of migrants’ network. Moreover, we overcome some of the deficiencies of the IV estimation by applying the Roodman’s conditional mixed-process (CMP) estimator. Results robustly suggest that youth in households which receive remittances have considerably larger probability of establishing their own business, ranging between 28% and 33%, compared to their non-youth non-receiving counterparts. The main policy recommendation is that the Macedonian government should start devising a strategy for channelling remitted money into more productive use, especially converting those funds into jobs for youth.

Keywords: remittances, migration, self-employment, Macedonia

JEL Classification: F24, J21

Suggested Citation

Petreski, Marjan and Mojsoska-Blazevski, Nikica and Ristovska, Maja and Smokvarski, Edi, Youth Self-Employment in Households Receiving Remittances in Macedonia (November 18, 2014). Partnership for Economic Policy Working Paper No. 2014-08, Available at SSRN: https://ssrn.com/abstract=2526737 or http://dx.doi.org/10.2139/ssrn.2526737

Marjan Petreski

University of American college - Skopje - School of Business Economics and Management ( email )

Skopje, 1000
Macedonia

Nikica Mojsoska-Blazevski (Contact Author)

University of American College, Skopje - School of Business Economics and Management ( email )

Treta Makedonska Brigada, bb
Skopje, 1000
Macedonia

Maja Ristovska

University American College Skopje (UACS) ( email )

Treta Makedonska Brigada
Skopje, 1000
Macedonia

Edi Smokvarski

University American College Skopje (UACS) ( email )

Treta Makedonska Brigada
Skopje, 1000
Macedonia

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