Return Migration, Self-Selection and Entrepreneurship in Mozambique

37 Pages Posted: 24 May 2014

See all articles by Catia Batista

Catia Batista

Nova School of Business and Economics; CReAM; IZA Institute of Labor Economics; NOVAFRICA

Tara McIndoe Calder

Central Bank of Ireland; University of Dublin - Institute for International Integration Studies

Pedro C. Vicente

New University of Lisbon - Nova School of Business and Economics

Abstract

Does return migration affect entrepreneurship? This question has important implications for the debate on the economic development effects of migration for origin countries. The existing literature has, however, not addressed how the estimation of the impact of return migration on entrepreneurship is affected by double unobservable migrant self-selection, both at the initial outward migration and at the final inward return migration stages. This paper uses a representative household survey conducted in Mozambique in order to address this research question. We exploit variation provided by displacement caused by civil war in Mozambique, as well as social unrest and other shocks in migrant destination countries. The results lend support to negative unobservable self-selection at both and each of the initial and return stages of migration, which results in an under-estimation of the effects of return migration on entrepreneurial outcomes when using a 'naïve' estimator not controlling for self-selection. Indeed, 'naïve' estimates point to a 13 pp increase in the probability of owning a business when there is a return migrant in the household relative to non-migrants only, whereas excluding the double effect of unobservable self-selection, this effect becomes significantly larger – between 24 pp and 29 pp, depending on the method of estimation and source of variation used.

Keywords: international migration, return migration, entrepreneurship, self-selection, business ownership, migration effects in origin countries, household survey, Mozambique, sub-Saharan Africa

JEL Classification: F22, L26, O15

Suggested Citation

Batista, Catia and McIndoe Calder, Tara and Vicente, Pedro C., Return Migration, Self-Selection and Entrepreneurship in Mozambique. IZA Discussion Paper No. 8195. Available at SSRN: https://ssrn.com/abstract=2441491

Catia Batista (Contact Author)

Nova School of Business and Economics ( email )

Universidade Nova de Lisboa
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

CReAM

Drayton House
30 Gordon Street
London, WC1H 0AX
United Kingdom

IZA Institute of Labor Economics ( email )

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

HOME PAGE: http://www.iza.org/

NOVAFRICA ( email )

Nova School of Business and Economics
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

HOME PAGE: http://www.novafrica.org

Tara McIndoe Calder

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

University of Dublin - Institute for International Integration Studies ( email )

The Sutherland Centre Level 6 Arts Building
Trinity College
Dublin 2
Ireland

Pedro C. Vicente

New University of Lisbon - Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

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