Temporary Migration for Long-term Investment

Laurent Bossavie, Joseph-Simon Görlach, Caglar Ozden and He Wang

No 9740, Policy Research Working Paper Series from The World Bank

Abstract: In the presence of credit constraints, temporary migration abroad provides an effective strategy for workers to accumulate savings to finance self-employment when they return home. This paper provides direct evidence of this link and its effects on workers’ employment trajectories by using a new, large-scale survey of temporary migrants from Bangladesh. It constructs and estimates a dynamic model that establishes connections between asset accumulation and credit constraints, and, thus, between workers’ migration and self-employment decisions. Interlinked impacts also emerge from simulations of three key policy interventions that target migration costs or domestic credit constraints for entrepreneurship. Lowering migration costs increases emigration, reduces the age at which workers depart, and reduces the duration of their time abroad, which together lead to higher savings and domestic self-employment. Reducing the interest rate for entrepreneurial loans reduces migration and savings levels, undercutting the positive effects on business creation at home. Correcting workers’ inflated perceptions about overseas earnings potential reduces emigration rates and durations, triggering a decrease of both repatriated savings and self-employment in Bangladesh. The findings, which have implications for migrant-sending countries, highlight the need for policies to take into account the linkages between migration and self-employment decisions.

Keywords: Employment and Unemployment; Migration and Development; Trade and Services; Private Sector Development Law; Private Sector Economics; Marketing; Labor Markets (search for similar items in EconPapers)
Date: 2021-07-28
New Economics Papers: this item is included in nep-fdg, nep-int and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Temporary migration for long-term investment (2025)
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