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

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  • Wahba, Jackline

    (University of Southampton)

  • Zenou, Yves

    (Monash 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.

Suggested Citation

  • Wahba, Jackline & Zenou, Yves, 2009. "Out of Sight, Out of Mind: Migration, Entrepreneurship and Social Capital," IZA Discussion Papers 4541, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4541
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    More about this item

    Keywords

    entrepreneurship; social capital; savings; selection;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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