Do International Labor Migration and Remittances Reduce Unemployment? Case Study of Western Balkans 2010-2022

The objective of this study is to explore the correlation between migration remittances and unemployment reduction in Western Balkan countries from 2010 to 2022.The research aims to analyze the influence of migration and remittances on unemployment levels in the Western Balkans region.The study seeks to identify and analyze variables affecting unemployment, with particular attention to migration patterns and remittance flows.The study utilizes panel data sourced from the World Bank and employs various econometric methods such as OLS, fixed effects method, random effects method, and the Hausman-Taylor model.Results from the Hausman test indicate that the Hausman-Taylor instrumental variable approach is more reliable and efficient compared to fixed effects and random effects methods for examining the relationship between migration, remittances, and unemployment rates in the Western Balkans.Findings reveal a positive coefficient for migration, indicating that for every 1% increase in migration, unemployment also increases.This relationship is further clarified by examining remittances, which suggests that recipients of remittances are more likely to experience increased unemployment.The primary limitations of the research include the lack of official data available from the earliest periods for these countries.This study contributes significantly to the existing literature by providing tangible data on the relationship between migration and unemployment in the Western Balkans.The results emphasize the crucial role that migration and remittances play for citizens of Western Balkan countries.