Three Essays on Unemployment, Migration, and Remittances in Bulgaria

This dissertation contains three distinct chapters, which discuss the concepts of unemployment, migration, and remittances. The following paragraphs succinctly describe their content. For most any government, it is a primary goal to keep unemployment levels close to natural, as well as to reduce the transition rate for jobless people looking to rejoin the labor force. In order to accomplish such targets, it is important to understand what factors affect an individual's employment decisions. This chapter tests the particular impact of remittances and unemployment benefits on unemployment duration, utilizing data from the 1995 Bulgarian Integrated Household Survey. The primary method for evaluating the hypotheses is survival analysis through incremental Cox proportional hazard models. The findings indicate that unemployment benefits have a strong negative effect on labor force participation, but no significant effect of remittances can be confirmed. In conclusion, certain government initiatives, like unemployment benefits, can potentially undermine the original intention of maintaining a stable and persistent labor market. Internal migration is recognized as an important factor which affects regional economic development through the movement of labor from rural to urban areas. Since development is predicated upon increase in income, which most readily occurs when labor moves away from agriculture and into more industrial and service-oriented jobs, there is ample economic literature that studies and attempts to pinpoint the main determinants of this process. This chapter examines the neoclassical theory of migration utilizing a data set that covers migration in Bulgaria from 2006 to 2011. The main hypothesis is whether wage differentials and opportunity for employment are the driving factors of both labor-motivated migration and non-economic migration. The data set utilized in this analysis is in a panel data format; therefore the method used for testing the hypothesis involves building different regression models for random and fixed effects. The models provide results contrary to prediction of theory - it seems that economic incentives have a greater effect on migration of people who state that they are moving for purposes other than employment, yet those same incentives have an inconclusive effect on labor migration. Migration is a complex demographic phenomenon with various effects on economic activity. While some argue that labor outflow from rural areas destabilizes agricultural production, others claim that resulting capital inflows, in the form of remittances, end up enhancing agricultural efficiency and productivity. This chapter attempts to contribute to the literature by answering the question what impact, if any, household migration choices have on investment in agriculture, which is considered a key source of living in rural areas and, as such, presents an alternative to migration. This task is achieved through econometric analysis performed on the 2007 Bulgaria Multi-Topic Household Survey. The chapter sets out to examine the causes of migration patterns using probit models, and the effects of independent variables (most notably migration) on agricultural expenditures using ordinary least squares regression. Among the main results of the probit analysis on migration is that mostly young, male and well-educated people are prone to take part in it. The OLS regression output supports the portion of the literature that claims migration tends to have a negative effect on agricultural production.