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Temporary migration and self-employment: Evidence from Tunisia
Abstract
Based on statistics from the Central bank of Tunisia and on a survey describing Tunisian workers who have returned from migration, this paper shows that temporary migration has potentially important consequences for sending countries like Tunisia. The effects operate through at least two channels. On one hand, transfers sent by migrants to their origin country represent a sizeable source of foreign currency and income. On the other, savings repatriated upon return under different types of goods allow poor workers to overcome credit constraints for investment into small projects.
... By treating all migrants as a single homogenous group, studies neglect variations in their access to human and financial capital while abroad (Dustmann & Kirchkamp, 2002;Wassink & Hagan, 2018), which is essential to their abilities to launch new ventures upon return (Alshanty & Emeagwali, 2019;McCarthy et al., 2018). Second, most studies treat self-employment among return migrants and non-migrants as a single homogeneous category (Démurger & Xu, 2011;Dustmann & Kirchkamp, 2002;Mesnard, 2004;Mezger Kveder & Flahaux, 2012), thus neglecting the disparate self-employment experiences documented among returnees (Gruenhagen & Davidsson, 2018;Wassink & Hagan, 2018). In one exception, Piracha and Vadean (2010) separated ownaccount and employer self-employment into separate categories and found that migration experience was significantly associated with both but had a much larger marginal effect on the probability of becoming an employer than on the probability of becoming an own-account worker. ...
... Data collection staff use both ethnographic and survey techniques to compile detailed information about household members and full labor market and migration histories for all household heads (Massey & Zenteno, 2000). The longitudinal nature and size of the MMP is unique relative to other surveys that have been used to examine return migration and self-employment, which are often cross-sectional and conducted in only a handful of communities (e.g., Démurger & Xu, 2011;Hagan et al., 2015;Mesnard, 2004;Mezger Kveder & Flahaux, 2012). This study uses information for all male household heads with non-missing information for the years 1975-2017. ...
... The Wald test of exogeneity failed to reject the null hypothesis that the error term from the first stage was uncorrelated with the error term from the second stage regression (p = 0.319). The non-significant Wald test indicates that endogeneity may not be cause for serious concern in the case of Mexico-U.S. migration and business formation, a conclusion that is consistent with studies of migration and business formation in other countries and with research on U.S. migration and wealth accumulation in Mexico (Démurger & Xu, 2011;Garip, 2012;Mesnard, 2004). ...
This study investigates the effect of international migration experience on entrepreneurship in sending areas. To identify prosperous businesses that create jobs and encourage economic development, this study isolates businesses other than street-vending enterprises with non-family employees. Retrospective life history data from the Mexican Migration Project (N = 11,789 persons & 146,372 person-years) was used to estimate the annual probability of becoming an entrepreneur across 170 Mexican communities between 1975 and 2017. This study found that (1) any prior migration experience increases the probability of entrepreneurial entry relative to non-migrants; (2) accumulated months of migration experience are positively associated with the probability of entrepreneurial entry; (3) undocumented status is associated with a lower probability of entrepreneurial entry. The positive effect of accumulated migration experience on entrepreneurship suggests that international migrants can accumulate human and financial resources that are essential to early stage entrepreneurship. Thus, entrepreneurship represents an important pathway through which international migration can encourage economic development in less developed regions. At the same time, the results suggest that that immigration policies in receiving countries can undercut migrants’ capacities to mobilize resources and contribute to economic development upon return. These findings suggest that target migration creates a win–win by addressing labor shortages in receiving countries, while transferring resources to sending areas that enable economic mobility and development.
... Self-employment requires investment (finance) at start-up, and credit constraints prevent small business development. The high temporary overseas income allows those migrants interested in transferring occupations to self-employment to accumulate savings (Mesnard, 2004). In return, these savings become a critical determinant of occupational choice. ...
... Return migrants can include a heterogeneous group of failed asylum seekers, migrants protected under temporary schemes, refugees after the termination of their asylum status, illegal immigrants, and migrants with an expired temporary permit, and legal migrants who demand to return to their country of origin (Betseha, 2016). The Universal Declaration of Human Rights, in Article 14, states that: everyone has the right to seek and to enjoy in other countries asylum from persecution and this declaration infers us that return is personal and a matter understood to be certain and voluntary as opposed to a challenge and negotiation for migrants (Mesnard, 2004). However, in reality, return is a result of different factors. ...
... Self-employment requires investment (finance) at start-up, and credit constraints prevent small business development. The high temporary overseas income allows those migrants interested in transferring occupations to self-employment to accumulate savings (Mesnard, 2004). In return, these savings become a critical determinant of occupational choice. ...
... Return migrants can include a heterogeneous group of failed asylum seekers, migrants protected under temporary schemes, refugees after the termination of their asylum status, illegal immigrants, and migrants with an expired temporary permit, and legal migrants who demand to return to their country of origin (Betseha, 2016). The Universal Declaration of Human Rights, in Article 14, states that: everyone has the right to seek and to enjoy in other countries asylum from persecution and this declaration infers us that return is personal and a matter understood to be certain and voluntary as opposed to a challenge and negotiation for migrants (Mesnard, 2004). However, in reality, return is a result of different factors. ...
Purpose
This study attempted to contribute to the existing literature on return migration by framing the discussion within the association between self-employment and returning migrants in the context of Ethiopia particularly on Gondar city youth returnees.
Design/methodology/approach
The study has used a combination of cross-sectional and descriptive research design with a quantitative approach. Quantitative data from 195 youth returnees using a survey questionnaire were employed to address the study objectives. A Census sampling strategy was employed to select study participants. To test the study hypothesizes, a χ² test was implemented to show the association between independent and dependent variables.
Findings
The findings of this study showed that there is no association between self-employment and return migrants. More specifically, the study results revealed that sectoral and occupational experience gained from abroad do not help return migrants for new business formation.
Research limitations/implications
This study which was focused only on self-employed return migrants where comes from Saudi Arabia, likely does not represent the whole return migrants from abroad. In addition, this study does not include all independent variables that influence the self-employment of return migrants. It only considers occupational and sectoral experience. To understand comprehensively, future research will do by considering all indicators of self-employment of return migrants and also make a comparative analysis between urban and rural return migrants' possibility to become self-employed.
Practical implications
Return migration is one of the demographic phenomena in the world which needs attention from government and non-government organizations. Taking into account this, the paper will serve as an input for policymakers and local officials to consider self-employment carefully to support returnees' sustainable entrepreneurial performance and economic growth. It will also help officials to understand some of the challenges that self-employed returnees have been faced including the provision of working area, formal credit, and pieces of training consistent with the experience brought from abroad and tax incentives.
Originality/value
Studies on youth return migration in sub-Saharan Africa countries are limited and this study will contribute to the return migration literature with an attempt to examine the association between self-employment and return migration in the context of Ethiopia. Accordingly, it examines the relationship between self-employment among youth return migrants by taking sectoral and occupational experience as major indicators.
... in this sense, Black & Castaldo (2009) argues that those who accumulated a greater amount of savings are more likely to return to self-employment. Previous studies found that saving in abroad have positive link with rm performance (Mesnard, 2004;Wahba, 2014). A study by (Black & Castaldo, 2009) revealed a positive correlation between the accumulation of savings and investment in entrepreneurial activity. ...
Purpose
The purpose of this study was to examine determinants that influence entrepreneurial performance of return migrants in Gondar city of Ethiopia, and in turn contribute to the literature of migration and entrepreneurship by adding evidence from Ethiopia on the determinants of entrepreneurial performance of return migrants.
Design/methodology/approach
The study employed a descriptive case study research design with quantitative research approach. The sample of this study was 195 male and female youth migrant returnees which are selected using multi-stage sampling technique.
Findings
The findings of this study identified that accessibility of job, labor market policy, access to finance, working premises and government support are significant predictors in explaining entrepreneurial performance of return migrants in one hand. On the other hand, however, saving, education, business environment, sectoral and occupational experiences are found to be insignificant predictors in explaining entrepreneurial performance of return migrants.
Research limitations/implications
Theoretically, the integration of determinants with returnee’s business performance has contributed to the theory of migration and entrepreneurship. The sample used in this study only concentrated on young migrant returnees with age category of 15–29 years old in Gondar city. Any future research will consider all returnees in the city.
Practical implications
The findings is significantly benefit the field of development and management studies, offices in charge of following and regulating return migrants affairs, policymakers and practitioners at all levels of the government. In general, the findings of this study make meaningful contributions to return migrants by identifying determinants of entrepreneurial performance of returnees which will in turn helps to enhance the performance of their firm.
Originality/value
This study contributes to the migration and entrepreneurship literature on the determinants of entrepreneurial performance of return migrants for developing countries. Specifically, in the context of African returnees, as they did not get much scholarly attention through testing predictor variables on the entrepreneurial performance of return migrants using logit model.
... In the same context, Makhlouf and Selmi (2021) confirm the stability of remittances during the post-revolutionary period that Tunisia is going through. For his part, Mesnard (2004), based on a survey study in the case of Tunisia, finds that return migration allows Tunisian households to adjust credit constraints, therefore, to invest in productive projects. ...
The objective is to present our contribution to the theoretical literature through a simple theoretical model dealing with the effect of remittances on the labor market of the origin countries and on the other hand to test this relationship empirically in the case of Tunisia. The methodology used consists of estimating a panel of the nine main destinations of the Tunisian migrants in Europe between 1997 and 2017. The empirical results show that the main factors explaining the decision to emigrate are the economic factors related mainly to the income differential, the demographic factors related to the differential age structure of the origin and host populations, and the cultural factors linked basically to the language mastery. Indeed, the migrant stocks are one of the main determinants of the remittances to Tunisia. But there are other variables that do not lack importance such as the economic conditions linked by the host countries. This shows that Tunisian migrants react more to economic conditions in European countries than in Tunisia. The economic situation of European countries dominates the number of emigrants as an explanatory factor for the amount of transfers from Tunisian emigrants. Similarly, the results confirm that an increase in remittances significantly reduces the demand for employment and therefore increases the unemployment rate. This positive correlation reveals that the impact of demographic changes on the effect of remittances occurs through an increase in unemployment due to the aging of the population, which coincides with the case of Tunisia going through a demographic transition period.
... Due to the financial constraint of many countries of origin of some migrants, migrant remittances can sustain the promotion of entrepreneurial activities and thus increase employment opportunities (Woodruff & Zenteno, 2007). Moreover, remittances and repatriated savings are a way to finances new projects whose lead to job creation (Dustmann & Kirchkamp, 2002;Mesnard, 2004). Furthermore, Rapoport (2002); Démurger and Xu (2011); Giulietti et al. (2013) assert that migrant remittances encourage the self-employment of recipients and help also to create employment opportunities in the home country's labor market. ...
This study examines how workers’ pre-existing socio-economic profiles andcross-border return-migration experiences affect their lifetime andintergenerational transmission of economic status in three Middle East andNorthern Africa (MENA) countries. We apply transition analysis andinstrumental variable regressions to seven harmonized Labor Market PanelSurveys - Egypt (1998, 2006, 2012), Jordan (2010, 2016), and Tunisia(2014) - to link the current economic outcomes of prime-age male workersto those in prior years and to those of their fathers. Real earnings in prioryears are imputed using the historic positions of individuals, as well as thejob-type and occupation group cell means observed in the survey year. Wefind that migration decisions and destinations are driven by economic,geographic, and family-history considerations. Return migrants landhigher-earning jobs and are more mobile across generations thannever-migrants. They outperform non-migrants, not only now but also inprevious years and, according to evidence, even before their migration spell.After controlling for mitigating factors, the role of migration disappears,implying that individual-level effects and demographics are responsible.
Temporary migration is widespread globally. While the literature has traditionally focused on the impacts of permanent migration on destination countries, evidence on the effects of temporary migration on origin countries has grown over the past decade. This paper highlights that the economic development impacts, especially on low- and middle-income origin countries, are complex, dynamic, context-specific, and multichanneled. The paper identifies five main pathways: (a) labor supply; (b) human capital; (c) financial capital and entrepreneurship; (d) aggregate welfare and poverty; and (e) institutions and social norms. Several factors shape these pathways and their eventual impacts. These include initial economic conditions at home, the scale and double selectivity of emigration and return migration, whether migration was planned to be temporary ex ante, and employment and human capital accumulation opportunities experienced by migrants while they are overseas. Meaningful policy interventions to increase the development impacts of temporary migration require proper analysis, which, in turn, depends on high-quality data on workers’ employment trajectories, as well as their decision processes on the timing of their migration and return. These are currently the biggest research challenges to overcome to study the development impacts of temporary migration.
Although a significant portion of migration is temporary, comprehension of factors at destination that can shorten or extend migrants’ stays abroad is still limited. One such unexplored factor is the macroeconomic fluctuation at the destination. Are migrants’ return functions of macroeconomic fluctuations at the destination countries? The question is explored empirically using the variation in Gross Domestic Product per capita growth rates between 2000 and 2009 in the multitude of destinations that Nepali migrants work. Return of Nepali migrants increases as the economy at the destination expands relative to that at home. Additionally, the magnitude and timing of the response vary respectively across foreign earning distribution and contexts.
The theoretical and empirical literature generally regards international migration as producing a cycle of dependency and stunted development in sending communities. Most migrants' earnings are spent on consumption; few funds are channeled into productive investment. We argue that this view is misleading because it ignores the conditions under which productive investment is likely to be possible and profitable. We analyze the determinants of migrants' savings and remittance decisions, using variables defined at the individual, household, community, and macroeconomic levels. We identify the conditions under which U.S. earnings are repatriated to Mexico as remittances and savings, and indicate the factors leading to their productive investment.
The paper studies the factors which shape entrepreneurship among young adults. It finds, using data on a British birth cohort, that the probability of self-employment depends sensitively upon whether the individual ever received a gift or inheritance. Those who were given or inherited £5,000, for example, were approximately twice as likely, ceteris paribus, to set up in business. This is consistent with, and a new test of, recent results from the US stressing the importance of capital and liquidity constraints. The paper also evaluates a number of hypotheses suggested in the literature on small businesses.
This paper analyses the impact of government tax and subsidy policy on immigration of human capital and the effect of such immigration on growth and incomes. In the context of a two-country endogenous growth model with heterogeneous agents and human capital accumulation, we argue that human capital flight or "brain drain" arising out of wage differentials, say because of differences in income tax rates or technology, can bring about a reduction in the steady state growth rate of the country of emigration. Additionally, permanent difference in the growth rates as well as incomes between the two countries can occur making convergence unlikely. While in a closed economy, tax-financed increases in subsidy to education can have a positive effect on growth, such a policy can have a negative effect on growth when human capital flight is taking place. Since subsidizing higher education is more likely to induce substantial brain drain, it is likely to be inferior to subsidy to lower levels of education if growth is to be increased.