Migrants’ transfers and educational expenditure: empirical evidence from Albania

Abstract

The present paper analyses the consumption behaviour of Albanian families. In particular the empirical work aims to cast some light upon the relationship between consumption in education and the volume of remittances, sent internally and from abroad by households members. The empirical question is whether remittances positively contribute to higher consumption in education and whether these transfers represent a distinct source of welfare from other components of total household income. Moreover, the available data set allows us to distinguish between internal and international remittances and this contributes to important insights into the understanding of the reasons to remit. In fact the different motivations behind remitting may influence the expenditure pattern out of transfers. The empirical estimation accounts for the censored nature of the education consumption through using Tobit, Heckman two-step as well as semiparametric models for sample selection are applied. A final econometric aspect that deserves concern is the possible endogeneity one of the regressors. To account for this problem, instrumental variable estimation is employed.