During the last two decades, South-East European countries and in particular Albania have experienced a large increase in the number of people migrating to more developed countries. With a large portion of their population abroad, these countries are highly dependent on remittances, which in the case of Albania far
exceed Foreign Direct Investments.

Using household survey data for Albania, the study will first model decision-making in remittance-receiving households and compare with non-remittance-receiving households. The focus of the first section will be on human capital investment and the second section on labour market participation.

In the third section the macro determinants will be estimated, in order to better understand the dynamics of remittances in Albania and neighbouring countries. A gravity-type equation will be used to assess to what extent remittance flows respond to key macroeconomic variables such as
stock of migrants, dependency ratios, stock market returns, exports, and imports.