Basic relationships between human capital, migration and labour markets in the Western Balkans: An econometric investigation

Abstract

AbstractThe high outward mobility that characterises the countries in the Western Balkan region—already for three decades—is often seen as tightly linked to labour market imbalances and persistently low utilisation of human capital over time. To shed light on these issues we analysed the effects of labour market determinants and human capital endowment on migration and vice versa by estimating simultaneously a system of equations that accounted for such relationships in the context of WB countries. The period under analysis is 2007–2019 and the destination countries are the EU15. The empirical results confirm the importance of wage gaps and their changes as an important pull factor for driving emigration. In addition, gaps in human capital emerge as a powerful determinant for explaining emigration into countries where returns to human capital are relatively higher.