Return Migration and Self-Employment: Evidence from Mexican Migrants

We study how changes in return migration patterns over the last decade impacted self-employment rates in Mexico. Using state historical migration rates as instruments, we calculate elasticities of self-employment to return migration of 0.093, 0.156, and 0.236 for all workers, males, and low-educated male workers, respectively. Back-of-the-envelope calculations indicate that the 0.18 percentage point decline in the return migration rates observed between 2006 and 2016 reduced the self-employment rate by 5.8 percent relative to the level seen in 2006. Additionally, we estimate the gains from migration and self-employment among Mexican return migrants controlling for observable and unobservable characteristics. While return migrants have earnings 1.72 log points higher than non-migrant Mexican workers, we do not find differences in the earnings of self-employed and wage-employed return migrants once we control for unobservable skills.