Return Migrants: The Rise of New Entrepreneurs in Rural China

Abstract

This paper analyzes return migrants' occupational choice upon their return to their home village, by using an original rural household survey conducted in Wuwei county (Anhui province, China) in 2008. We apply two complementary approaches: a horizontal comparative analysis of occupational choice between non-migrants and return migrants, and a vertical investigation of the impact of migration experience on returnees only. Two main findings are drawn up from the estimation of probit models which account for potential selection bias and endogeneity. First, return migrants are more likely to be self-employed and to opt for higher ability jobs than non-migrants. Second, both return savings and the frequency of job changes during migration increase the likelihood for return migrants to become self-employed. These findings suggest that (a) working experience during migration enhances individual's human capital and entrepreneurial ability, and (b) repatriated migration experience is a key stimulating factor in promoting rural entrepreneur activity.

Entrepreneurship of the Left-Behind

“…These estimates are not directly comparable with those of previous studies, since we look at spill-over effects of migration and not at the effect on migrants themselves. However, they seem in line with results from a recent study conducted in one county in China (Démurger and Xu, 2011). In their case, the marginal effect of returnees versus non-migrants was 0.099 -although the average self-employment rate for returnees in that province was much higher (44%).…”

“…The estimates of other covariates in the model are in line with previous studies on rural selfemployment in China (such as Zhang et al, 2006 andDémurger andXu, 2011). For example, there is a concave relationship between age and self-employment; males are more likely to be self-employed than females; marital status and education are positively associated with selfemployment.…”

“…In their work, they attempt to control for the selection bias associated with return migration, yet not for the emigration decision in the first place. Using data from a household survey conducted in one county in China, Démurger and Xu (2011) examine the impact of migration experience on individuals' employment choices. They control for the endogeneity between return migration and occupational choices.…”

“…The standard approach consists of estimating a specification where the self-employment choice (henceforth SE) is a function of a set of standard covariates and an indicator of whether the individual is a return migrant or non-migrant. By acknowledging the existence of endogeneity/simultaneity between the employment and migration decisions, several studies have employed a bivariate Probit specification to estimate the parameters of interest (see e.g., Wahba and Zenou, 2012;Démurger and Xu, 2011 The type of household where individuals live is likely to be co-determined with the self-employment choice, which raises concerns of potential endogeneity between the variables of interest. Accordingly, this leads us to explore our research question using the following model (subscripts for the observational units are suppressed):…”

“…One strand of the literature has examined the consequences of temporary/return migration on occupational choices and entrepreneurship of returnees (McCormick and Wahba, 2001;Dustmann and Kirchkamp, 2002;Mesnard, 2004). More recently, a few papers such as Piracha and Vadean (2010), and Démurger and Xu (2011) have compared the entrepreneurial activity of returnees with that of non-migrants, highlighting the benefits of temporary migration for the region of origin. Another strand of the literature has focused on the impact of migration and remittances on the left-behind (see for example, Zenteno, 2007 andGibson et al, 2011).…”