Labour market performance and migration flows - European ...

European CommissionOccasional Paper 60, Volume IFor the Maghreb countries, the project on Return Migration to the Maghreb, MIREM 31 , showed thatalmost two thirds of the surveyed return migrants went back to the Maghreb before the age of 50, and43.2% of them before the age of 40, so with the prospect to spend a sizeable portion of their workingage life back in the countries of origin. Similarly, the data from the two waves of the Egyptian LabourForce Survey conducted in 1998 and 2006 suggest that even for Egypt a sizeable share of the returneeswent back home well before retirement age. 32 This suggests a possibly significant positive impact onAMC labour markets.In Egypt, were the phenomenon of return migration is far more widespread and hence more studiedthan among other AMCs, according to the ELMPS 2006 around 2.5% of the working age population in2006 have worked overseas previously, i.e. are overseas returnees. Moreover, 7.1% of households have areturn overseas migrant. This has to do with both the tradition of temporary migration to the Gulfcountries and the possibility of public sector employees taking a two-year leave of absence to workabroad (see box in Section 4.2 on this scheme). The latter has led to an extraordinary configuration: theshare of returnees (36%) working in the government sector is higher than among non-migrants (26%).The positive impact of migration in the labour market is reflected in this case by the fact that only 40%of returnees under this scheme resume their job in the public sector. Wahba (2007) compares returnees tonon-migrants in the labour market in 2006 and finds that returnees seem on average to be more skilledthan non-migrants. Examining the educational levels of current, return and non-migrants in 2006 basedon the 2006 ELMPS suggests that return migrants are more educated than non-migrants. However,return migrants are on average only slightly more educated than current migrants: almost 25% ofreturnees hold a university degree compared to 23% among current migrants.The hypothesis that return migration increases the probability of entrepreneurial activity has beenrecently tested for some countries, comparing returnees with stayers. Kilic et al. (2007) find thatreturnees to Albania are, ceteris paribus, more likely to become entrepreneurs than stayers. Wahba andZenou (2008) conversely find that Egyptian returnees have a lower propensity to set up anentrepreneurial activity, notwithstanding the experiences and the savings they have accumulated abroad– migration also produces a loss of social capital, a key factor in establishing an enterprise whichoperates in an informal setting. However, data from the Egypt Labour Market Panel Survey 2006 revealthat a significantly larger share of returnees was engaged in an entrepreneurial activity, and – moreinterestingly – that the survival rate of SMEs run by return migrants between 1998 and 2006 exceeded,by 14 percentage points, the corresponding figure for stayers. McCormick and Wahba (2001) found thatone of the most important aspects of international migration has been its impact on occupational choiceupon return and its tendency to increase the share of employers and entrepreneurship in Egypt. Theyprovide evidence that the duration of the migration experience and foreign savings increase theprobability of becoming an entrepreneur upon return to Egypt: temporary migration, through savings,provides access to credit which enable returnees to become self-employed and so entrepreneurs.Another aspect of return/temporary migration is their overseas work experience and the extent towhich it impacts on human capital by affecting wages of migrants upon return to the home country.Wahba (2007b) finds strong evidence that overseas employment and temporary migration result in awage premium upon return to Egypt. On average, return migrants earn around 38% more than nonmigrantsin Egypt. The findings show that highly-educated (university graduate) returnees earn onaverage 19% more than non-migrants. Indeed, the wage premium is even higher for the uneducatedreturnees who earn on average 43% more than non-migrants. This evidence highlights the importanceof temporary migration on human capital in Egypt.In any case, the evidence available, also from AMCs, definitely confirms the hypothesis of thepositive effects of return migration. However, one should not forget that, with the possible exception31 Robert Schuman Centre for Advanced Studies.32 In 2006, 70 per cent of Egyptians return migrants were less than 50 years old (ELMPS, 2006).80