Migration and Labour Choice in Albania

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Migration and Labour Choice in Albania

• Carlo Azzarri, World Bank
• Gero Carletto, World Bank
• Benjamin Davis, FAO
• Alberto Zezza, FAO

ABCDE, Tirana, June 10-11, 2008
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Outline

• Objectives
• Income structure in Albania
• Education, land and migration
• Models
• Results
• Conclusions and policy implications

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Objectives

• How does migration affect labor market
  participation and occupational choice?
• Is there a gender issue?
• Labor disincentive wait for men and income for
  women?

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Household income structure
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Household income structure contd
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Characterizing migration
Access to international migration ( of HHS)
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Characterizing migration ...contd

• 600-800,000 International migrants 1990-2002
• Private transfers are widespread
• Underestimation of migration and remittances size
• Migrants -from Coastal and Central Areas
• -from poor families
• Temporary vs permanent migration
• Greece vs further destinations

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Education, land, and migration assets

• Hypotheses
• Education as main determinant of labor
  participation
• education gt white collar, off-farm
• land gt on-farm job, but U-shaped
• Migration more investment and labour to
  self-employment and agriculture, but possible
  moral hazard problem

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Results Participation Probit

• Education positive and increasing for female
• Agricultural land positive for MF, with
  decreasing marginal returns
• Relative deprivation positive
• District level unemployment lower participation
• Own temp migration strongly negative for men
• Mig. to Italy disincentive effect for women (via
  remittances?)

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Results Occupational choice (MNL)/1

• Women are least likely to participate in self
  employment activities, followed by wage
  employment, then on-farm labour.
• More childrengthigher likelihood of working in
  agriculture as opposed to wage work for men
• Married men are more likely to be salaried
  workers than farmers
• Married women tend to get stuck on farm and
  are less likely to be engaged in wage employment
• Education pulls women out of farming and into
  wage employment

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Results Occupational choice (MNL) /2

• Agricultural assets more on-farm, though this
  decreases with land size (reverse effect is found
  for land and age for females)
• Individual temporary migration more
  self-employment -particularly for younger
  individuals.
• For women, previous migration experience leads to
  a higher likelihood of working in wage labour
• Permanent migration to Italy reduces the relative
  probability of being self-employed, and this
  effect increases with age.

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MNL -Predicted probabilities-
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Conclusions

• Farming is still the main livelihood of many
  Albanian households, heavily dependent on
  low-productivity agriculture.
• Diversified income strategies.
• Migration is used as a mechanism to diversify
  economic activities to cope against risk and
  obtain liquidity and capital under credit and
  insurance market failures.

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Conclusions ...contd

• Access to household and individual level assets
  affects individual labour participation and
  labour activity choices.
• Agricultural, migration and human capital assets
  have a differential impact across livelihood
  choices, which varies by gender and age.
• For men the disincentive to labour participation
  is due to the wait-for-the-next-migration effect
  for women it is linked to an income effect -via
  remittances- and/or a reallocation of time and
  occupations (at the household level).

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Policy implications

• Migration is crucial for the economic future of
  Albania, both in terms of financing economic
  development (as informal safety net), and in
  reducing excess labour supply and poverty.
• Agriculture appears to be more of a survival
  strategy than part of a poverty exit strategy.
• Education may play a role in encouraging
  diversification out of agriculture, and in
  Albania this means promoting a relatively higher
  level of education, beyond the high school level.
  

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Policy implications ...contd

• Agriculture and migration may be complements, if
  migration can help easing liquidity constraints
  or dealing with risk in some kinds of business at
  home.
• What future migration will be for household
  livelihood strategies is crucial for designing
  policies more effective in stimulating growth and
  reducing poverty.
• Future research is needed to detangle the
  direction of causality between migration and
  poverty.

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• Grazie!