International Conference on Eurasian Economies
9-11 September 2015 – Kazan, RUSSIA
Paper detail
Paper ID : 1176
Status : Paper published
Language : English
Topic : Growth and Development
Presenter: Dr. Blagica Petreski
Session : 5A Trade and Growth
Remittances as a Shield to Socially-Vulnerable Households in Macedonia: The Case When the Instrument is Not Strictly Exogenous
Remittances as a Shield to Socially-Vulnerable Households in Macedonia: The Case When the Instrument is Not Strictly Exogenous
- Dr. Marjan Petreski (University American College, Macedonia)
- Dr. Blagica Petreski (Finance Think, Macedonia)
- Despina Petreska (Finance Think, Macedonia)
Abstract
The objective of the paper is to investigate if remittances sent to Macedonia have a role to play for shielding socially-vulnerable households. To that end, we devise an index of social vulnerability, comprehending income poverty, unemployment of both spouses, single parents, as well conditions of impaired health, undernourishment, material deprivation and insufficient clothing, so as to capture non-income vulnerability conditions. Remittances then are allowed to determine the index of vulnerability. As remittances are likely endogenous to vulnerability, we use the noneconomic motive to migrate as instrument, as it is likely correlated with remittances, since any migrant is likely to send remittances irrespective of his migration motive; while uncorrelated with the shocks onto vulnerability. We use the Remittances Survey 2008 and conditional mixed process (CMP) estimator. Results suggest that remittance-receiving households have, on average 6% higher probability to report zero-vulnerability, suggesting that they indeed could act as social protection. However, as the assumption of noneconomic motive for migration being a good instrument may be easily dismantled, we further pursue Conley et al.’s (2012) method, allowing for a direct link between noneconomic motive and vulnerability. Results suggest that if we have a reasonable belief that they are determined simultaneously, or directly correlated due to the existence of a third unobservable factor, then it is reasonable to consider that this influence slightly reduces the effect of remittances on vulnerability.
JEL codes: F22, F24
Petreski, Marjan, Petreski, Blagica, Petreska, Despina (2015). "Remittances as a Shield to Socially-Vulnerable Households in Macedonia: The Case When the Instrument is Not Strictly Exogenous" in Proceedings of International Conference of Eurasian Economies 2015, pp.105-112, Kazan, RUSSIA.
DOI: https://doi.org/10.36880/C06.01176
