Investing Back Home : Return Migration and Business Ownership in Albania

In view of its increasing importance,
and the dearth of information on return migration and its
impacts on source households, this study uses data from the
2005 Albania Living Standards Measurement Study survey and
assesses the impact of past migration experience of Albanian
households on non-farm business ownership through
instrumental variables regression techniques. Moreover,
considering the differences in earning potentials and
opportunities for skill acquisition in different destination
countries, the impact of household past migration experience
is differentiated by main migrant destinations, namely
Greece and Italy. The study also tests for the hypothesis of
the existence of migration cycles, by differentiating the
time spent abroad based on the year of return. The empirical
results indicate that household past migration experience
exerts a positive impact on the probability of owning a
non-farm business. While one additional year in Greece
increases the probability of household business ownership by
roughly 7 percent, a similar experience in Italy or further
destinations raises the probability by over 30 percent.
Although past migration experience for the period 1990-2000
is positively associated with the likelihood of owning a
household enterprise, a similar impact does not materialize
for the period 2001-2004. The latter finding seems
suggestive of the fact that more recent migrants are yet to
attain a target level of required savings and skills in
order to successfully establish a new business upon return.