The impact of international migration and remittances on poverty

Albania is one of the poorest countries in Europe and has experienced large migratory flows since the fall of communism. Although there is a growing interest on research related to international migration and remittances, there is a gap in the literature of their impact on poverty. The aim of this study is to fill this gap by investigating this impact in the Coastal and Mountain regions of Albania. Different from other studies in the field, it also provides estimations of changes in poverty in the hypothetical case of additional migration and remittances, which is more relevant from a future policy perspective. Given the large disparities in the development and poverty rates of the regions under investigation the main hypothesis is that the impact is positive in both regions, but different between them. The empirical approach estimates counterfactual consumption expenditure with and without remittances, accounting for endogeneity and selection bias using the Heckman sample-selection model. The main findings confirm the crucial role that international migration has played in regional poverty reduction, and highlight the need for region-specific policies for poverty reduction.