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Out of Sight, Out of Mind: Migration, Entrepreneurship and Social Capital

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Author Info

  • Wahba, Jackline

    ()
    (University of Southampton)

  • Zenou, Yves

    ()
    (Stockholm University)

Abstract

The aim of this paper is to investigate whether return migrants are more likely to become entrepreneurs than non-migrants. We develop a theoretical search model that puts forward the trade off faced by returnees since overseas migration provides an opportunity for human and physical capital accumulation but, at the same time, may lead to a loss of social capital back home. We test the predictions of the model using data from Egypt. We find that, even after controlling for the endogeneity of the temporary migration decision, an overseas returnee is more likely to become an entrepreneur than a non-migrant. Although migrants lose their original social networks whilst overseas, savings and human capital accumulation acquired abroad over-compensate for this loss. Our results also suggest that social networks have no significant impact on becoming entrepreneurs for returnees but matter for non-migrants.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4541.

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Length: 38 pages
Date of creation: Nov 2009
Date of revision:
Publication status: published in: Regional Science and Urban Economics, 2012, 42 (5), 890–903
Handle: RePEc:iza:izadps:dp4541

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Keywords: entrepreneurship; social capital; savings; selection;

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References

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  1. Chiara Monfardini & Rosalba Radice, 2008. "Testing Exogeneity in the Bivariate Probit Model: A Monte Carlo Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(2), pages 271-282, 04.
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Citations

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Cited by:
  1. Frédéric Docquier & Hillel Rapoport, 2012. "Globalization, Brain Drain, and Development," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 681-730, September.
  2. Mezger Kveder, Cora Leonie & Flahaux, Marie-Laurence, 2013. "Returning to Dakar: A Mixed Methods Analysis of the Role of Migration Experience for Occupational Status," World Development, Elsevier, vol. 45(C), pages 223-238.
  3. Sylvie Démurger & Hui Xu, 2010. "Return migrants: The rise of new entrepreneurs in rural China," Working Papers 1008, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  4. Capuano, Stella & Marfouk, Abdeslam, 2013. "African brain drain and its impact on source countries: What do we know and what do we need to know?," MPRA Paper 47944, University Library of Munich, Germany.
  5. Giulietti, Corrado & Wahba, Jackline & Zenou, Yves, 2014. "Strong versus Weak Ties in Migration," IZA Discussion Papers 8089, Institute for the Study of Labor (IZA).
  6. Picard, Pierre M. & Worrall, Tim, 2014. "Is a Policy of Free Movement of Workers Sustainable?," IZA Discussion Papers 8035, Institute for the Study of Labor (IZA).

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