PEP-PAGE project

Youth self-employment in households receiving remittances in Macedonia

Objectives, background and method

This project aims to explore if remittances may be used to support the entrepreneurial activities of unemployed youth in recipient households in Macedonia.

Low job creation and high unemployment are the most important problems of Macedonia, where the youth unemployment rate of 55% remains persistently high. Amid the global economic crisis, tightened credit conditions, lack of venture capital financing and the malfunctioning labour market, youth restrain their entrepreneurial aspirations and rarely risk new venture.

On the other hand, Macedonia is a small country, which heavily relies on remittances from its outward migration. Indeed, remittance inflows represent both an important income for households, as well as an important source of financing the country's current account deficit.

 

Since 2004, in average, remittances represent about 4% of the country’s GDP (approx. 2 billion/year) - roughly the same as foreign direct investments. In terms of pure cash remittances, it represents about USD 2,700 in additional income per housedhold, per year - their usage, however, remains largely unkown.

The underlying question is whether remittances deal solely with short-term poverty relief - without providing the poor with the tools to exit poverty by their own means - or if remittances may potentially have a positive effect on entrepreneurship.

To produce a reliable assessment of the probability that a young person will enter self-employment if his/her household receive remittances, the research team (see below) used the statistical process of regression analysis on data from a survey conducted in July-September 2008 (i.e. before the global financial crisis hit Macedonia’s economy) among a sample of 1,211 households, through a project called “Development on the Move” (DotM). As its primary focus was to analyze migration and households left behind (with a multitude of questions about remittances) in Macedonia, the DotM 2008 survey provides the most complete and extensive dataset on remittances, and related aspects, at the individual/household level.

The results from the researchers' analysis show that youth living in households receiving remittances have considerably larger probability to establish their own business, ranging between 28% and 33%, compared to the non-youth non-receiving counterparts. Find out more through the following publications (see, in particular, the project's working paper and/or policy brief).

Project links and documents

Research team

Find out more about this project - its analytical approach and outcomes - through the following links/documents:
  • Ms. Nikica Mojsoska-Blazevsk
    Dean and Professor at the  School of Business Economics and Management
    University American College Skopje
  • Mr. Edi Smokvarski
    Assistant Professor at the  School of Business Economics and Management
    University American College Skopje
  • Ms. Maja Nestorovska
    Research Associate at the Laboratory for Socioeconomic Research
    University American College Skopje
  • Mr. Marjan Petreski
    Assistant Professor and Vice-Dean for Research
    University American College Skopje
PEP Project PMMA-12415 (source page) Working paper (PDF)
Project proposal (Word) Policy brief (PDF)
Final research report (Word) Slide presentation (PDF)
1st prize winner of 2014 PEP Best Practice Awards Poster

Policy engagement and impact

The ultimate objective of this project is to propose policy recommendations to help channel the large amount of remittances received in Macedonia into job creation or productive ventures for youth. The various institutional affiliations and “contacts” of the research team members have allowed them to consult directly with the Minister of Labour and Social Policy and the Governor of the National Bank of Macedonia, whose inputs have contributed to influence the design of the research project (questions and objectives).

In fact, throughout the course of their PEP project, the team has held several consultation meetings with national-level policymakers from various government agencies - including also (in addition to those cited above) the Ministry of Finance, the Minister of Foreign Investment - all of which have committed to support and contribute to the dissemination of the research findings.

The researchers also engaged national and regional mass media to raise awareness on the issue (i.e. the potential of using remittances to foster youth entrepreneurship) amongst both the decision-makers and the general public. Some of the project team members also took early initiatives to participate in national and international conferences where they presented their research work and preliminary findings (see the list of conferences below).

As a result of these efforts, the researchers' recommendations will be taken-up in the formulation of various strategic policy documents, including the forthcoming "Strategy for Employment 2015-2020" of the Ministry of Labour and Social Policy (MLSP). The team also managed to launch a nation-wide debate on the policy options for enhancing the effect of remittances on youth self-employment, and their findings were reflected in a report by the IMF.

More recently, two of the research team members were hired by ILO to conduct an impact evaluation of selected social programs at the recommendation of the MLSP, thanks to the reputation and expertise gained through and with their PEP project. They are the first locally-based researchers to conduct an impact evaluation in/for Macedonia (usually conducted by foreign experts).

In December 2014, the team was invited to participate in a special meeting hosted by the MLSP, and involving several other government institutions, to provide inputs for the re-design of national employment policy strategies and programs, based on the outcomes and findings from their research work.

Dissemination - conference presentations and mass media

  • Some of the research team members were first invited to present their work at a high-level international Policy Dialogue on Youth Employment in Southeast Europe, organized by the World Bank and the wiiw, in Vienna (Austria) on October 21, 2013. (more about the event).
     
  • Soon after, in November 2013, the research team presented their PEP project and preliminary findings "at home", in Skopje, during a conference entitled "Remittances and development in the Western Balkans". Their presentation was featured in a special report from the regional (Balkans) Al Jazeera television network, entitled "Big money from the diaspora and for the small businesses". (Find it here on the Al Jazeera website - see at 1:20) 
     
  • A year later, in November 2014, the team organized a national policy conference, again in the capital of Macedonia, to communicate and discuss their PEP research findings, conclusions and ensuing policy recommendations with several high-level policy makers and other stakeholders at the national level. Find out more about this event, which was a great success and resulted in both wide and targeted dissemination of the findings, as well as strong policy commitment to incorporate the related recommendations. 

On the side of media, two of the resarch team members were invited, on two different occasions, to discuss their research issues and findings as special guest speakers on an "Economic magazine" TV show, broadcasted by the national TV station Alsat-M. You can view the interviews here (for those who speak/understand Macedonian or Albanian) : first interview, and second interview.

Media coverage of their PEP national policy conference (held on November 28, 2014) resulted in over 20 news/press reports by various TV stations, daily newspapers, magazines, web news portals, etc.

Statements from Dr. Marjan Petreski have also been featured in a national daily newspaper - in an article focused on the project's issues (remittances and self-employment) and entitled "The migrants' cake melts down". Read/find the article through this link (in Macedonian)

Finally, he has published several columns in the most prominent national magazine "Economics and Business", the texts of which are made available on his personal blog: http://marjanp.blogspot.com/)

 

PEP-PAGE projects

The project described above is one of the several projects selected for support under the PEP research and capacity building initiative for Policy Analysis on Growth and Employment (PAGE) in developing countries. The PAGE program is co-funded by UK's Department for International Development (DFID) and Canada's International Development Research Center (IDRC).

This particular project was selected in June 2013, following the first of three competitive calls for proposals of the PAGE initiative. So far, a total of 42 projects have been selected for support under the two first PAGE funding rounds. Find out more

     

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