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

38 Pages Posted: 9 Nov 2009

See all articles by Jackline Wahba

Jackline Wahba

University of Southampton, Department of Economics; IZA Institute of Labor Economics

Yves Zenou

Monash University - Department of Economics; Stockholm University; Research Institute of Industrial Economics (IUI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

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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.

Keywords: social capital, entrepreneurship, selection, savings

JEL Classification: L26, O12, O15

Suggested Citation

Wahba, Jackline and Zenou, Yves, Out of Sight, Out of Mind: Migration, Entrepreneurship and Social Capital. IZA Discussion Paper No. 4541, Available at SSRN: https://ssrn.com/abstract=1501977

Jackline Wahba (Contact Author)

University of Southampton, Department of Economics ( email )

Southampton, SO171BJ
United Kingdom
+44 23 8059 3996 (Phone)

HOME PAGE: http://https://sites.google.com/site/jackiewahba/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Yves Zenou

Monash University - Department of Economics ( email )

Australia

Stockholm University ( email )

Universitetsvägen 10
Stockholm, Stockholm SE-106 91
Sweden

Research Institute of Industrial Economics (IUI) ( email )

P.O. Box 5501
S-114 85 Stockholm
Sweden

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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