Labour market performance and migration flows - European ...

European CommissionOccasional Paper 60, Volume IRemittances can also be channeled through migrant associations – the so-called home townassociations – formed by migrants living in the same country, and coming from the same area, whoput together their savings to invest them in projects to promote the economic and socialdevelopment of their origin community. Collective remittances are usually used for theconstruction of hospital, schools and other social investments, and they can thus stimulate thedemand for workers in the building sector, with positive ensuing spillover effects (Guarnizo andSmith, 1998).4.2 Return migrantsReturnees can bring back home new skills they have acquired in destination countries. Moreover,thanks to the savings they have accumulated abroad, they can also afford to undertake costlyinvestments. They may also be better placed to become entrepreneurs, and to adopt new models ofentrepreneurial activities, which they have experienced in destination countries.The hypothesis that return migration increases the probability of opting for entrepreneurial activityhas been recently tested, comparing returnees with stayers. Kilic et al. (2007) find that returnees toAlbania are, ceteris paribus, more likely than stayers to become entrepreneurs. Wahba and Zenou(2008) conversely find that Egyptian returnees have a lower propensity to set up an entrepreneurialactivity, notwithstanding the experiences and the savings they have accumulated abroad, asmigration also produces a loss of social capital that represents a key factor in establishing anenterprise which operates in an informal setting. Most existing empirical studies pool together selfemployedand employers as being entrepreneurs, while the ensuing job creation effect is clearlydifferent.Returnees’ skills and savings can bring a substantial contribution to the development of mediumand small enterprises: MSEs in developing countries are extremely vulnerable, and theestablishment of a new entrepreneurial activity may be of little significance if it does not last.Returnees may be better able to overcome the difficulties faced by MSEs, as they can draw on theirforeign savings not only to finance the initial capital investment, but also to reduce the vulnerabilityof their enterprises in the face of adverse demand shocks. If this is the case, then the job creationeffect due to return migration would induce a lasting increase in the demand for labour.4.3 Social remittancesThe transfer of new forms of entrepreneurial models is not limited to return migrants alone, but it canalso occur through the increased tightness of communication with the countries of destination. Socialremittances not only permit migrant households to improve their knowledge of available technologiesand entrepreneurial models, but there is also a “multiplier” effect due to communication among nonmigranthouseholds. A specific kind of social remittances is represented by the technological transferbrought about by networks of skilled migrants (Docquier and Lodigiani, 2007).Part II - Empirical evidenceAfter an introductory section on the salient features of migration out of the Arab MediterraneanCountries, the structure of this part of the paper mirrors the first part, where we presented thetheoretical arguments about the impact of migration on labour market outcomes in origin countries.But its content does not, as the empirical evidence lags seriously behind the theory because of theremarkable analytical challenges that this evidence poses, and because of binding data limitations.Wherever possible, we nevertheless try to offer an – albeit limited and tentative – assessment of therelevance of the theoretical arguments for AMCs. It is important though to flag up an important caveathere. This paper does not provide new empirical evidence. Rather it systematizes the existing anddispersed evidence according to the structure laid out in the previous section. While importantknowledge gaps remain, the systematization of the existing empirical evidence will hopefully reducethe number of the gaps that a reader might have initially feared.122