Working Paper: NBER ID: w26055
Authors: Massimo Anelli; Gaetano Basso; Giuseppe Ippedico; Giovanni Peri
Abstract: Migration outflows, especially of young people, may deprive an economy of entrepreneurial energy and innovative ideas. We exploit exogenous variation in emigration from Italian local labor markets to show that between 2008 and 2015 larger emigration flows reduced firm creation. The decline affected firms owned by young people and innovative industries. We estimate that for every 1,000 emigrants, 10 fewer young-owned firms were created over the whole period. A simple accounting exercise shows that about 60 percent of the effect is generated simply by the loss of young people; the remaining 40 percent is due to a combination of selection of emigrants among highly entrepreneurial people, negative spillovers on the entrepreneurship rate of locals, and negative local firm multiplier effect.
Keywords: emigration; firm creation; innovation; youth; entrepreneurship
JEL Codes: J61; M13; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Emigration (F22) | Firm creation (L26) |
| Emigration (F22) | Loss of young individuals (J17) |
| Emigration (F22) | Selection of highly entrepreneurial emigrants (F22) |
| Emigration (F22) | Negative spillovers affecting local entrepreneurship rates (F69) |
| Emigration (F22) | Local firm multiplier effect (H32) |
| Emigration (F22) | Creation of innovative startups (O35) |
| Loss of young, innovative individuals (O35) | Local economic growth and job creation (O29) |
| Emigration (F22) | Fewer firms created (L26) |