Migration, Financial Constraints, and Entrepreneurship: Evidence from Mexico

This is an interesting paper with encouraging results on the effects of migration on entrepreneurship. It is by Qing Wang. 

There has been evidence on the entrepreneurial behavior of migrants in receiving countries or after they return to home countries, but little research on the entrepreneurship of left-behind persons when migrants are still abroad. Using data from the Mexican Family Life Survey, this paper examines the effects of ongoing migration on the entrepreneurship of left-behind family members. Striking evidence shows that migration stimulates the entrepreneurship of left-behind members through improved financial status. The preferred estimates indicate that having migrant family members increases an individual’s rate of participation in entrepreneurship by at least 50% relative to the mean. The analysis also demonstrates the differential migration effects and differential motives pertinent to becoming new entrepreneurs by gender. These findings have profound implications for the empowerment of women and how public policies such as microcredit may promote entrepreneurship through the relaxation of financial constraints.

There is no agreement on the literature on this issue, with some papers finding evidence for the opposite, meaning that migration reduces entrepreneurship via a moral hazard effect created by remittances. Results depend on gender, and rural/urban location.