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Emigration and Entrepreneurial Drain

Author

Listed:
  • Massimo Anelli
  • Gaetano Basso
  • Giuseppe Ippedico
  • Giovanni Peri

Abstract

Emigration of young, highly educated individuals may deprive origin countries of entrepreneurs. We identify exogenous variation in emigration from Italy by interacting past diaspora networks and current economic pull factors in destination countries. We find that a 1 standard deviation increase in the emigration rate generates a 4.8 percent decline in firms' creation in the local labor market of origin. An accounting exercise decomposes the estimated effect into four components: subtraction of individuals with average entrepreneurial propensity, selection of young and college-educated among emigrants, negative spillovers on firm creation, and selection on unobservable characteristics positively associated with entrepreneurship.

Suggested Citation

  • Massimo Anelli & Gaetano Basso & Giuseppe Ippedico & Giovanni Peri, 2023. "Emigration and Entrepreneurial Drain," American Economic Journal: Applied Economics, American Economic Association, vol. 15(2), pages 218-252, April.
    • Handle: RePEc:aea:aejapp:v:15:y:2023:i:2:p:218-52
    DOI: 10.1257/app.20210194
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    References listed on IDEAS

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    1. Chernozhukov, Victor & Hansen, Christian, 2008. "The reduced form: A simple approach to inference with weak instruments," Economics Letters, Elsevier, vol. 100(1), pages 68-71, July.
    2. Rodrigo Adão & Michal Kolesár & Eduardo Morales, 2019. "Shift-Share Designs: Theory and Inference," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 1949-2010.
    3. Rodrigo Ad~ao & Michal Koles'ar & Eduardo Morales, 2018. "Shift-Share Designs: Theory and Inference," Papers 1806.07928, arXiv.org, revised Aug 2019.
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    Citations

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    Cited by:

    1. Paolo Croce & Matteo Filippi & Paolo Piselli & Andrea Ramazzotti, 2025. "Internal Migration, Local Development and Structural Change: Evidence from the Italian Golden Age," CSEF Working Papers 751, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Cabra-Ruiz, Nicolás & Rozo, Sandra & Sviatschi, María Micaela, 2025. "Forced Displacement, the Perpetuation of Autocratic Leadership, and Development in Origin Countries," Policy Research Working Paper Series 11049, The World Bank.
    3. Federico Barbiellini Amidei & Matteo Gomellini & Lorenzo Incoronato & Paolo Piselli, 2025. "Demographic Change and Entrepreneurship Across Regions: Long-Run Evidence from Italy," CSEF Working Papers 752, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    4. Shrestha, Samyam & Sant'Anna, Hugo, 2023. "Immigration Enforcement, Entrepreneurship, and Firm Entry/Exit," 2023 Annual Meeting, July 23-25, Washington D.C. 335611, Agricultural and Applied Economics Association.
    5. repec:ags:aaea22:335611 is not listed on IDEAS
    6. Luigi Benfratello & Davide Castellani & Anna D'Ambrosio, 2024. "Migration and the location of MNE activities: Evidence from Italian provinces," Journal of Regional Science, Wiley Blackwell, vol. 64(2), pages 428-461, March.
    7. Cabra-Ruiz, Nicolás & Rozo, Sandra V. & Sviatschi, Maria Micaela, 2025. "Forced Displacement, the Perpetuation of Autocratic Leadership, and Development in Origin Countries," IZA Discussion Papers 17671, Institute of Labor Economics (IZA).
    8. Alessia Lo Turco & Daniela Maggioni & Federico Trionfetti, 2024. "Immigration and the skill premium," Working Papers hal-04556685, HAL.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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