Determinants of Migrants’ Earnings and Remittances: Evidence from Kosovo

Abstract

This paper is an attempt to find the main determinants of migrants’ earnings and analyze what makes migrants remit money to their home countries. We use the dataset on migrants compiled by the Riinvest Institute2 in 2006. Ordinary least squares (OLS) and interval regression methods are used to estimate the migrants’ earnings model, while for the remittances model we use OLS and Tobit estimation methods. The results suggest, inter alia, that the returns to education are positive for migrants; also, migrants in countries with higher per capita GDP have higher family earnings. Among the most important determinants of remittances are migrants’ investments in their home countries, migrants’ perceptions of the business environment, migrants’ earnings, gender and the duration of migration. This paper tries to fill the gap in the literature, especially for the case of Kosovo, by exploring what determines the earnings of migrants and what makes migrants remit part of these earnings.