Migration and the Survival of Entrepreneurial Activities in Egypt

Abstract

The return of temporary migrants represents a key channel through which migration exerts an economic influence upon origin countries. The literature has shown that returnees tend to opt for entrepreneurial activities and that this could contribute to job creation. However, this effect crucially hinges on returnees' ability to carry on their entrepreneurial activity over time, and no evidence of whether they are successful or not in doing so has been provided so far. We address this research question for Egypt, using a labour market survey with a longitudinal dimension which allows us to analyze the determinants of the survival of entrepreneurial activities. Non-random selection in unobservables is likely to generate endogeneity between entrepreneurs' migration experience and the probability of survival over time. We address this concern through a recursive bivariate probit model, where the rate of population growth is used as an instrument for migration, and through a two-stages residuals inclusion estimation. We find that past migration experience of the entrepreneurs significantly improves the chances of survival of their entrepreneurial activities.