Out of sight, out of mind: Migration, entrepreneurship and social capital

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 may lose their social capital, they accumulate savings and experience overseas that increase their chances of becoming entrepreneurs.

► Are return migrants more likely to become entrepreneurs than non-migrants?
► We develop a theoretical search model and test its predictions.
► We find that overseas returnees are more likely to become entrepreneurs.
► Migrants lose their origin social capital.
► But, they accumulate savings and experience that help them become entrepreneurs.