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Selection, selection, selection: the impact of return migration

Abstract

The evidence on the impact of return migration on the sending country is rather sparse, though growing. The contribution of this paper is in addressing various selectivity problems while quantifying the impact of return migration on wages of returnees using non-experimental data. Using Egyptian household-level survey data, I estimate the wages of return migrants controlling for several selectivity biases arising from emigration choice, return migration choice, labor force participation choice, and occupational choice following return. The findings provide strong evidence that overseas temporary migration results in a wage premium upon return, even after controlling for the various potential selection biases. However, the estimates underscore the significance of controlling for both emigration and return migration selections. Ignoring the double selectivity in migration would overestimate the impact of return migration on the wage premium of returnees, as migrants are positively selected relative to non-migrants, but returnees are negatively selected among migrants.

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Notes

  1. It should be noted that this data pre-dates the recent political events in Egypt.

  2. See for example Binzel and Assaad (2011).

  3. See also Docquier and Rapoport (2012) for a survey of the brain drain and brain gain literature

  4. Sun (2013) examines the productivity difference between domestic venture capitalists and their foreign educated counterparts in China.

  5. See Marchetta also (2012) who studies the survival of the entrepreneurial activities of returnees versus non-migrants, again controlling for the endogeneity of return migration but not for the selection into emigration.

  6. See Girgis (2002).

  7. See Nassar (2008) for an overview of temporary migration in Egypt.

  8. The estimates of Egyptians residing in OECD countries by receiving countries differ from the estimates by CAPMAS; in some cases, they are about a third of CAPMAS estimates. See Zohry and Harrell-Bond (2003).

  9. See Di Bartolomeo et al. (2010).

  10. See The World Bank (2011) Migration and Remittances Factbook 2011, The World Bank, Washington DC.

  11. For details about the data collection and methodology, see Barsoum (2009).

  12. A household is defined as individuals who live under the same roof and eat from the same cooking pot. A current migrant is an absent member of the household who lived in the same dwelling before migration.

  13. Zohry and Harrell-Bond (2003) p. 48.

  14. Significant at 1 % level.

  15. Note that the high proportion of returnees from Iraq and almost nil share among current migrants reflect the political situation in Iraq. However, there is no statistical difference in the characteristics of Egyptian migrants to Iraq compared to Egyptian migrants to other Arab countries such as Jordan or Libya.

  16. It has to be remembered that even using the higher estimates of the number of Egyptians residing abroad in the West, they would still be a very small proportion of the Egyptian population.

  17. Roodman (2011).

  18. See Heckman (1979) and Tunali (1986) for a discussion on sample selection and its correction.

  19. For robustness, we also used oil prices at age 25 and 27 years.

  20. The first shock, the Gulf war, lasted from August 1990 to February 1991. The second shock, the 9/11 attacks in the USA, took place in September 2001.

  21. Qism is an Egyptian sub-district (neighborhood) and is the smallest administrative unit. Data are from the 1988 Labor Force Sample Survey

  22. See Assaad (1997) on wage setting in Egypt.

  23. Note that Wahba (2007) is based on data from 1998. One major change in the early 2000s was the increase in Egyptian emigration to Europe.

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Acknowledgments

I would like to thank the editor and three anonymous referees for their helpful comments and suggestions. Funding from the Economic Research Forum (ERF) and the Economic and Social Research Council (RES-167-25-0678) is gratefully acknowledged.

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Correspondence to Jackline Wahba.

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Responsible editor: Klaus F. Zimmermann

Appendix

Appendix

Table 9

Table 9 Simple sample selection models

Table 10

Table 10 Simple IV estimates

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Wahba, J. Selection, selection, selection: the impact of return migration. J Popul Econ 28, 535–563 (2015). https://doi.org/10.1007/s00148-015-0541-4

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  • DOI: https://doi.org/10.1007/s00148-015-0541-4

Keywords

  • International return migration
  • Wages
  • Developing countries

JEL Classifications

  • F22
  • J24
  • O15
  • O53