Examine the association between self-employment and return migrants in Ethiopia: evidence from Gondar city youth returnees
Journal of Innovation and Entrepreneurship volume 12, Article number: 28 (2023)
This study attempted to contribute to the existing literature on return migration by framing the discussion within the association between self-employment and returning migrants in the context of Ethiopia particularly on Gondar city youth returnees.
The study has used a combination of cross-sectional and descriptive research design with a quantitative approach. Quantitative data from 195 youth returnees using a survey questionnaire were employed to address the study objectives. A Census sampling strategy was employed to select study participants. To test the study hypothesizes, a χ2 test was implemented to show the association between independent and dependent variables.
The findings of this study showed that there is no association between self-employment and return migrants. More specifically, the study results revealed that sectoral and occupational experience gained from abroad do not help return migrants for new business formation.
This study which was focused only on self-employed return migrants where comes from Saudi Arabia, likely does not represent the whole return migrants from abroad. In addition, this study does not include all independent variables that influence the self-employment of return migrants. It only considers occupational and sectoral experience. To understand comprehensively, future research will do by considering all indicators of self-employment of return migrants and also make a comparative analysis between urban and rural return migrants' possibility to become self-employed.
Return migration is one of the demographic phenomena in the world which needs attention from government and non-government organizations. Taking into account this, the paper will serve as an input for policymakers and local officials to consider self-employment carefully to support returnees' sustainable entrepreneurial performance and economic growth. It will also help officials to understand some of the challenges that self-employed returnees have been faced including the provision of working area, formal credit, and pieces of training consistent with the experience brought from abroad and tax incentives.
Studies on youth return migration in sub-Saharan Africa countries are limited and this study will contribute to the return migration literature with an attempt to examine the association between self-employment and return migration in the context of Ethiopia. Accordingly, it examines the relationship between self-employment among youth return migrants by taking sectoral and occupational experience as major indicators.
In this contemporary urban world, migration flows mainly from the global south urban and rural area tend to lead to the emergence of new Diasporas. Such concentrations of migrant groups cause the increment of various seedbed conditions for self-employment and entrepreneurship (Kourtit et al., 2013). As evidences indicated that over the last two decades entrepreneurship among return migrants has played a pivotal role in the enhancement of the urban economy in many developing countries (Naudé et al., 2017). Return migrants as an entrepreneur have a considerable impact on the welfare of urban communities, in particular a contribution to innovation and growth, creation of new jobs for less favored population groups, advancement of benefits from cultural diversity, and reinforcement of economic opportunities related to international connectivity (Kone et al., 2021). Furthermore, returning migrants are assumed to bring with them additional human capital, while migrants' remittances often help to ease poverty and provide a means of investment in small and medium-sized businesses in the presence of capital constraints (Black et al., 2009).
According to Giambra and Mckenzie (2019) migrants often have a greater likelihood of being self-employed at the destination than natives, and has sought to explain why this is the case and to estimate their contribution to the economy of the receiving region. On the contrary, this study focused to examine the association between self-employment and return migrants concerning the role of remittances in funding self-employment activities for remaining family members, and on the tendency of return migrants to engage in self-employment activities. In contrast, the immigration literature stresses that self-employment is often a common occupation at the destination, and we might think that existing self-employed individuals will be better able to succeed in self-employment at the destination, so that becoming self-employed could increase the likelihood of migration (Kone et al., 2021).
Self-employment requires investment (finance) at start-up, and credit constraints prevent small business development. The high temporary overseas income allows those migrants interested in transferring occupations to self-employment to accumulate savings (Mesnard, 2004). In return, these savings become a critical determinant of occupational choice. Those with high savings choose self-employment, while others decide for waged employment. Moreover, a higher likelihood of returning home might induce some migrants to enter self-employment to accumulate financial, human, or social capital to be used once back to their home countries (Kautto, 2019). Most self-employment activities in developing countries are in the informal sector and the enterprises set up by return migrants are no exception. In Ethiopia, the 2020 survey reveals 943,178 persons out of the 5,844,877 employed persons were working in the informal sector, make up nearly one-sixth of the total employment (CSA, 2020).
Evidence shows that substantial losses of African human capital resulting from the emigration of skilled professionals and bring negative consequences of skilled migration on economic development in African countries (Makina, 2012). These forces governments of a nation to propose policy instruments that seek to facilitate the return of African professionals to their countries of origin, where they can make contributions toward the national development of respective countries. Ethiopia is one of the largest producers of migrants in Africa accompanied by increased returnees, mainly as a result of mass deportations of nationals from abroad, especially from Saudi Arabia with 163,000 forcibly returned between November 2013 and March 2014 (Wickramasekara, 2019). Jobs in the formal economy are relatively scarce and income inequality is becoming wider in Ethiopia and due to these reasons many people choose to either move abroad for temporarily or to become self-employed. As result self-employment and migration now is the main source of income (Bigsten et al., 2013).
There is a wide range of researches that investigated return migrants in the global south counties. In this regard, a study by Bensassi and Jabbour (2017) on return migration and entrepreneurial success in Egypt showing that return migrant firms in the Egyptian case are more successful due to the advantage of the experience acquired abroad by the return migrant and more starting capital with accumulated enough human and physical skills after his/her return will have an important factor.
Furthermore, (Luchyk, 2017) conducted an empirical analysis on wage employment and self-employment as impacted by international work experience and managerial skills on being self-employed after return on polish return migrants. And then, he concluded that low skill jobs abroad accompanied with lack of required experience negatively caused to become salaried worker after return to Poland. In Ethiopia, a study by Bilgili et al. (2018) on return migrants' perception of living conditions revealed that the migration situation of the entire cycle affects the living conditions of migrants up on return. A study on female return migration and reintegration strategies in Ethiopia by Kuschminder (2014), revealed that the structural environments which are the governments' policies and approach toward returnees have an impact on the reintegration of female returnees. Research on illegal human migration: socioeconomic re-integration challenges in North Gondar Zone by Gebremariam et al. (2018) indicates that many returnees were faced starting from searching for or borrowing money from different sources. Betseha (2016), in his study, reported that the majority of Saudi returnees are not in the self-sufficient situation and currently facing several challenges relating to business sheds allocated, government bureaucracy, being organized into groups, and stringent requirements in vocational choice. Concerning this, as per the researcher's knowledge and critical investigation of different works of literature, no study has been conducted in Ethiopia and the case study area (Gondar city) on the association between self-employment and return migrants in Ethiopia.
To this end, against this background, this study aimed to examine the association between self-employment and return migrants in Ethiopia taking Gondar city as a case study. This paper is unique in developing conceptual and theoretical arguments by examining the relationship between self-employment and return migrants in the context of Ethiopia, where youth migrants are large in number to fill the gap in the migration entrepreneurship literature in the global south countries. Most importantly, this paper tried to test the following two hypotheses using the chi-square test. As a result, based on a review of the theoretical and empirical literature on occupational and sectoral experiences in the labor process of international migration, and business formation, the researcher proposed a hypothesis to guide his analysis of the relationship between migration and business formation of return migrants. Hypothesis (H0): experiences gained informally on the job in Saudi Arabia and transferred to the Ethiopian labor market have no positive relationship with business formation following return to Ethiopia. Hypothesis (H1): experiences gained informally on the job in Saudi Arabia and transferred to the Ethiopian labor market have a positive relationship with business formation following return to Ethiopia. The rest of this paper is structured as follows. Section "Literature review" discusses the theoretical concepts of return migrants and empirical pieces of evidence, section "Materials and methods" presents the material and methods of the study, section "Results and discussion" presents results and discussion, and finally, section "Conclusion" presents the conclusion and practical implication of the study.
It is relatively a recent concept and for that matter, it is a notion that lacks a commonly acknowledged meaning in national or international policy or law but it is yet a complex, dynamic and challenging segment of international migration. The terminological carelessness found in the relevant literature presents us with substantial difficulties in the study of return migration. Betseha (2016) in his doctoral dissertation defined return migration in different terminologies such as homeward migration, repatriation, remigration, reflux migration, and retro migration have been alternatively used to describe return migration.
Bovenkerk (2012) in his book entitled sociology of return migration shows the difficulty of finding solid and universally accepted definitions and shows that one may come across return migration under the following titles: back migration, countercurrent, counter flow, re-emigration, reflux migration, emigration, return flow, return migration, return movement, second-time migration, and repatriation. Return migration has multidimensional issues which influence the policymakers to consider international relations, economic relations, cultural relations, human rights, and securities (Kaur, 2010).
Return migrants can include a heterogeneous group of failed asylum seekers, migrants protected under temporary schemes, refugees after the termination of their asylum status, illegal immigrants, and migrants with an expired temporary permit, and legal migrants who demand to return to their country of origin (Betseha, 2016). The Universal Declaration of Human Rights, in Article 14, states that: everyone has the right to seek and to enjoy in other countries asylum from persecution and this declaration infers us that return is personal and a matter understood to be certain and voluntary as opposed to a challenge and negotiation for migrants (Mesnard, 2004). However, in reality, return is a result of different factors.
Accordingly to Wickramasekara (2019) return migrants are classified as the following.
Voluntary without compulsion: a migrant decides at any time during his/her stay to return home at his/her own free will, initiative, and cost without the enforcement of international or national actors.
Voluntary under compulsion (assisted voluntary return or enforced return): under this system, migrants are usually at the achievement of their work or study term abroad or are rejected for asylum, or unable to stay and thus choose to return at their wish. It also includes those refugees who had to leave their countries of origin because of conflict/crisis and who return in the post-conflict/crisis phase.
Involuntary or forced return: under this structure, it is the authorities or actors hosting migrants that order their return. Migrants not allowed entry to the country of destination or whose stay is no longer authorized as well as unsuccessful asylum seekers that do not return voluntarily are prone to such kind of return scheme. As stated above, the voluntary return has some essence of free will and well-informed decision of the individual stayer which denotes that coercive measures rarely exist. On the contrary, forced return involves the enforced return of an individual to his/her country of origin, based on an administrative or judicial act. Forced return is commonly known as deportation. In comparison with other types of involuntary returns, deportation is distinguished by its mandatory and state-sponsored character (Islam et al., 2019). Concerning this, the current returnees in Ethiopia have forced reruns mostly from Middle East countries particularly from Saudi Arabia.
Theoretical review on self-employment and return migration
Currently and in the previous 2 and/or 3 years, Ethiopians have been experiencing an unprecedented level of return migration particularly from the Middle East countries (Wassink & Hagan, 2018).
A large number of evidences revealed that in most countries in the world return migrants have been involved in high rates of self-employment. This in turn helps to the enhancement of finance and human capital that they have experienced abroad. Most commonly, self-employment and return migrants have a direct relationship that self-employment leads to a positive upward economic mobility among return migrants (Mahe, 2019; Tibajev, 2019; Wassink & Hagan, 2018).
In the twenty-first century, return migration is an emerged issue that needs strong attention from policymakers and international organizations support. In line with this, different empirical migration works of literature consider the counter-effect of the reverse flow of return migrants and local economic development of sending countries particularly in the context of the global south region.
A common finding of the migration literature is that migrants are more likely to choose self-employment upon return to their origin countries than non-migrants (Bensassi & Jabbour, 2017). This has led to the belief that return migration stimulates entrepreneurship in source countries and hence supports economic development. In this context, depending on the occupational outcome of the sending countries, there is a possibility that return migrants have been decided to migrate again after their return. In this case, according to Piracha (2015) being unemployed may not be a choice, and the migrant might opt either to work in the informal sector or to migrate again. Another possibility is that the migrant did not achieve the savings target they initially set (for example, saving enough to start a business) and, therefore, decides on a further stint abroad. Several factors can affect the occupational choice of return migrants. These include the migrant’s occupational experience (including non-employment) before migrating, employment experience in the host country, savings accumulated while abroad, reasons for return, migration duration, time in the home country after return, and any future migration intentions. For instance, evidence from Kyrgyzstan shows that migrants’ self-employment experience before migration has a significant effect on the choice to become self-employed after return (Brück et al., 2018). Migration experience and retained savings seem to be even more important than pre-migration experience, as demonstrated by cases in which migrants change their occupation after return, including choosing not to participate in the labor market. For example, 47% of Turkish migrants and 46% of Hungarian migrants did not participate in the labor market on their return home (Brück et al., 2018; Piracha, 2015; Wassink & Hagan, 2018).
Empirical evidences on self-employment and return migration
Several previous studies conducted in developing countries on return migrants have been pinpointed that there is a high rate of self-employment among return migrants as compared to non-migrants (Wassink & Hagan, 2018). Moreover, some studies also stated that return migrants' concentration in self-employment is a function of foreign savings and remittances that returnees use to fund new businesses (Kautto, 2019; Kone et al., 2021; Naudé et al., 2017). Foreign savings play a pivotal role for migrants when they are returning to economically dynamic communities with ample investment opportunities. Some studies argued that in developing countries the accessibility of credit to start a new business is very difficult which in turn encourages temporary migration as a means to acquire funds for small-scale investment (Brück et al., 2018). Recently, self-employment among return migrants has been studied primarily through the context of labor migration.
There is a large number of previous studies that investigate self-employment among return migrants in developing countries particularly in Latin America and African countries. Many of these studies tried to identify the potential causal effects of international migration experience on the probability of becoming self-employed upon return (Bensassi & Jabbour, 2017; Hagan & Wassink, 2017; Mahe, 2019; Xu, 2010). In general, these studies found that considering the potential of occupational choice to the decision to migrate, temporary international migration is positively associated with the probability of becoming self-employed after return to the sending countries.
More specifically, Mahe (2019) conducted a study which focused on how working overseas influences the choice to be self-employed upon return revealed that transients are more likely to be self-employed on return than non-migrants. A return migrants census on Mexican with 150 close-ended and 30 open-ended questions by Hagan and Wassink (2017) which captured demographic data and complete migration and work histories, including skill acquisition and transfers from job to job across the migratory circuit and social contexts and learning processes of skill development, respectively, as a factors of self-employment and business formation reveals that the proportion of business owners was higher among migrants than non-migrants. The relationship between skill transfer and business formation shows that a modest positive association owning a business with employees but failure to transfer skills was associated with lower odds of a business formation relative to non-migrants.
A cross-sectional survey data from 12,060 households and 49,186 individuals in Egypt by Mahe (2019) taking occupational experiences and sectoral as the independent variables to analyze the relationship between return migration and self-employment suggested that self-employed who temporarily migrated have acquired substantially more occupational experience, and worked in more sectors than self-employed who have not migrated. These statistics support the idea that working abroad leads to the accumulation of a labor market experience different from the one obtained by staying home. He further argued that pairwise correlations suggest a positive, statistically significant relationship between self-employment, return migration, and occupations. In addition, the linear correlation of his result between self-employment and sectors, positive and significant, is much weaker. On the other hand, the process of lifelong human capital development across the migratory path is essential to business formation among return migrants (Hagan & Wassink, 2017).
Results by Tibajev (2019); and Wassink and Hagan (2018) suggest that migration could contribute to the formation of entrepreneurial abilities by building skills through varied occupations and industrial sectors. And also, on average, having migrated temporarily significantly increases the probability of self-employment upon return, in a unit increase in occupational and sectoral experience. He further suggests that occupation and sectoral-specific experience resulting from working abroad affects the choice to be self-employed, beyond wage employment, by developing skillset balance and shows that temporary overseas labor experience raises the propensity of upward occupational mobility for highly skilled returnees.
Chen et al. (2019) conducted a study using cross-sectional data from Pakistan, explores the determinants of occupational choice by taking the independent variables of savings and paid work or self-employed. The results revealed that experience with self-employment and, savings upon return become a significant factor in the choice of self-employment over waged employment among return migrants in Pakistan but retirements from the domestic labor market are not a reason for opting for self-employment. A study by Piracha (2015) on Albania returnees based on the data Albanian Living Standard Measurement Survey in the year 2005, to know the factors which influence occupational choice after return shows that migration experience retained savings and spending a long time in the destination country seem to be even more important than pre-migration experience. And then, as demonstrated by cases in which migrants change their occupation after return including choosing not to participate in the labor market. The results revealed the level of human capital also strongly affects the occupational choice of return migrants. In addition, the result suggests that the occupational choice of migrants when they return is influenced, among other factors, by the form of migration (long-term, temporary, or circular); the duration of migration; and the reason for return and all have a positive relationship with self-employment than wage employment (Piracha, 2015).
Materials and methods
Gondar is one of the emerging and rapidly urbanized city of Ethiopia. The city has been divided into six administrative sub-cities, namely, Maraki, Azezo tseda, Arada, Jantekel, Zoble, and Fasil. Unemployment in the city remains high especially amongst the youth, including those with a university degree and migrants who returned from abroad (Tegenu et al., 2021). Informal sector employment is still dominant reflecting serious shortcomings of the labor market to provide formal employment. In the city, Micro and Small Enterprises (MSEs) have significantly reduced the unemployment rate with a significant impact on poverty alleviation. The city’s market for the products and services of MSEs is mainly dependent on government projects, such as condominiums, cobblestone roads, and university buildings construction. However, the transition of MSEs to medium and large enterprises is very low (Getaneh, 2020). The surrounding areas such as Metema and Humera, produce cotton and sesame, creating employment for thousands of inhabitants and generating foreign currency through market-oriented cash-crop production.
Most of Gondar's economic activities relate to trade and commerce, while, as the capital of the central Gondar Zone, public administration is also one of its core activities. The government is the main employer of the city's mainly young population, while many generate income in the informal sector. Besides unemployed graduates, illegal temporary migration is one of the threats in Gondar city due to the reason that being the hot spots of the country's route of migration via Ethio-Sudan borders of Metema and Humera and accompanied it as the home of returnees (Gebremariam et al., 2018).
In these urban areas, the high unemployment rates lead to a perpetuated dream of global migration. One of the largest current global migration flows is Ethiopian women traveling to the Middle East as domestic workers, which also often occurs through trafficking by brokers who connect to people through facilitations Bigsten et al. (2013) which has also been observed in Gondar city. Now, illegal temporary migration is a worldwide phenomenon that is rising in scope, complexity, and impact. It is a threat to Ethiopia in general and Gondar city in particular as being one of the hot spots of the country’s rout of migration via Ethio-Sudan that youths are migrating in the way Ethio-Sudan through Yemen to Saudi Arabia (Gebremariam et al., 2018). There was a fairly equitable distribution of male and female return migrants at 55.33% of returnees in the city from the Middle East (Kuschminder, 2014). Informal sector employment in the Amhara Region accounts for 21.5% of the country with females are higher than males (CSA, 2020).
Research design and data source
The study used a quantitative research approach. The research questions and objective of the study would be best answered through the appropriate research design. The study was intended to use a combination of cross-sectional and descriptive research design to investigate the relationship between self-employment and return migrants. These designs allowed a researcher to make observations or collect huge data on more variables of interest. By collecting cross-sectional data, the researcher tested the relationship between return migrants and self-employment by taking occupational experience and sectoral experience as independent variables and their impact on self-employment.
The main sources of the primary data were returnees selected as a sample from the labor and social affairs office of Gondar city. The major sources of the secondary data were annual reports in relation to returnees of labor and social affairs offices of Gondar city. In addition, document analysis and reviewing different relevant works of literature and previous researches about return migrants were conducted to crosscheck and supplement with primary data obtained through observations, interviews, and questionnaires hence the research objectives may not be addressed by collecting primary data. Besides, IOM documents and government policies regarding temporary migrants were reviewed.
Sampling method and sample size determination
The unit of analysis and inclusion criteria of participants of the study
While conducting a case study, because in this study, the researcher studied ‘the association between self-employment and return migrants’ considered as one case, the case of the study was communicated and the issues which were not the case of this study were also first sorted out. Therefore, the unit of analysis of this study was both temporary and circular migrant individuals who are living in Gondar city for collecting information about the case. Specifically, Saudi Arab returnees were the targeted participants, because most Arab migrants are temporary migrants in nature due to the legal environment in these countries and visa schemes sponsored, standards set by the Ministry of Human Resources and Emiratization usually for 1, 2, or 3 years for temporary labor (Valenta, 2020). Eligibility or inclusion criteria would be set earlier to categorize who the study respondents are and who are not. This is similar to the matter of setting boundaries in the case study which is, we should know first who our cases are and who our cases are not.
Accordingly, the researcher set the following inclusion criteria which put the researcher away from questions that are too broad and to ensure the study is reasonable in scope concerning sampling. The study area selected for this cross-sectional research was Gondar city, where a large number of youth returnees are coming from Saudi Arabia every year and the targets were young men and women of year ranges between 15 and 29 years who have been living in Arabs for more than a year and returned to Gondar city and supported by the government. As it is stated in the description of the study area, Gondar city is divided into six sub-cities, returnees who are living in all six sub-cities are sampled. Therefore, one of the inclusion criteria was participants’ current place of residence.
For this study, multi-stage sampling was used. Accordingly, first, based on purposive sampling Gondar city labors and social affairs office and technical and vocational institutions were selected. Because these offices are the nearest responsible office for returnee’s support and returnee’s data are registered when they come from abroad. Second, all the six sub-cities are included to take a more representative sample. Third, the individuals were stratified based on their sub-cities. Stratification is assumed to be best for this study, because respondents are supposed to be homogeneous due to inclusion and exclusion criteria. Since each stratum is more homogeneous than the total population, the researcher was able to get more precise estimates for each stratum, and by estimating more accurately each of the parts, and will get a better estimate of the whole (Kothari, 2004).
According to the Gondar city labor and social affairs report (2020), 195 individuals in the city satisfy the inclusion criteria stated above. Since the respondents are less than 200 the sampling strategy was Census to use the entire population as the sample. A census is attractive for small populations (e.g., 200 or less) (Taherdoost, 2017). To eliminate sampling error and provides data on all the individuals in the population, the study used census. In addition, some costs such as questionnaire design were the same that is, all the questionnaires were the same for all samples of 195, and the census sampling strategy for this research was affordable. Finally, nearly the entire population has been sampled, since they are small populations, to achieve a desirable level of precision.
The primary data was collected from returnees who are living in all sub-cities using survey questionnaires. To get accurate information and reliable data, the survey questionnaire was prepared in English and then translated to the local Amharic language (Ethiopian National and working language) for clarity of understanding by respondents. Data enumerators were selected carefully and trained for survey questions. To gather the appropriate information about the relationship between self-employment and return migrants in Gondar city, closed-end and open-ended questionnaires were distributed and collected from 195 respondents.
Data analysis method
The quantitative data have been analyzed by inferential statistics. More specifically, the chi-square test was used for this study to test the association between self-employment and return migrants. To test the hypothesis of no association between two or more groups, populations, or criteria (i.e., to check independence between two variables), chi-square is the best technique with a large sample size (Rana & Singhal, 2015). In this context, this study has used a large sample size, as a result, the technique was suitable. The formula for calculating a chi-square statistic is
where O stands for the observed frequency, and E stands for the expected frequency. To this end, through this test, the study analyzed that whether two variables of self-employment and business ownership are associated with each other or not by taking the independent variables of sectoral and occupational experiences which returnees have acquired while abroad.
Results and discussion
The variables which were utilized to analyze the demographic characteristics of the respondents under this study are age, sex, marital status, and education level.
As it is indicated from Table 1, the majority of the respondents of this study are working-age groups (15–29) accounted 166 (85.1%) and only 29 (14.9%) respondents are not in the working-age group. About limited employment options for young males or females, they were migrating in their working-age when they are completed secondary school. Moreover, working-age migrants are successful in overcoming the challenges they face both during and after the journey and making a living at the destination, which is often part of a risk-diversification strategy of households (Schewel, 2021). Besides, the working-age is the one who is subject to disappointment if the local opportunities are too limited to enable them to earn a living both for themselves and their households. The result is consistent with the findings of Makina (2012) who reported that most of the return migrants in Zimbabwe are found in the working-age group between 21 and 30 years. Similarly, the current study finding is consistent with the findings of (Bilgili et al., 2018; Cui et al., 2013; Hagan & Wassink, 2017). However, the findings of Luchyk (2017) reported that the majority of the Polish return migrants are found between the age group of 40–59.
Figure 1 illustrates that from the total of 195 respondents 83.6% are females and only 16.4% are males. This implies that a large number of the populations of Ethiopians are very young and females are dominant in number. The result of this study is inconsistent with the findings of Kuschminder (2014) who reported that there was a fairly equitable distribution of male and female return migrants at 55.33% of returnees in the city from the Middle East. Moreover, the result is also inconsistent with the findings of Luchyk (2017) and Tenkorang (2014) who reported that the majority (62.8%) of return migrants in Ghana were males. In Ethiopia, females are dominant compared to male return migrants, since females are more vulnerable and harassed. Because of the violation of their rights by Saudi employers, many females who work as housemaids outflow from their employers and end up as irregular migrants (Schewel, 2021). Furthermore, the finding of this study is also inconsistent with the findings of Hagan and Wassink (2017).
As indicated in Table 2, the majority of the participants of this study are married (44.6). It implies that married migrants are more likely to return to their origin country than unmarried ones. The current finding is consistent with the results of Bilgili et al. (2018); Makina (2012); and Tenkorang (2014) who reported that the majority of the return migrants in their respective study are married. Moreover, the current study finding is also consistent with the findings of (Thomas, 2008).
The majority of the respondents in this study fall under grades 1–8 accounted 47.69%. This indicates that returns who failed to succeed to grade 8 would choose to migrate hoping to get jobs as laborers abroad. As indicated in Fig. 2, migrants who fall under grades 9–10 are 31.79% followed by grades 11–12 which accounts for 11.79% and 6.15% of college and above graduates. Finally, only 2.56% of the respondents reported as illiterate. This indicates that, even though respondents completed primary and secondary education, they find it difficult to get job opportunities and finally choose to migrate for finding jobs abroad to create a business in their homeland. The result of this finding is consistent with the findings of Betseha (2016) and Bilgili et al. (2018) who stated that among the return migrants in their respective study majority are completed their primary school (9–10). The real ground situation in Ethiopia indicated that the majority of return migrants are high school drop-outs and mostly fall between grades 9–10. This resulted in a lack of employment opportunities in the home country and leads to the choice to migrate to Saudi Arabia mainly through peer pressure. Moreover, the current study is consistent with the research findings of Bensassi and Jabbour (2017).
Current occupational status of returnees
During the survey time, the respondents were asked about their occupational status. Therefore, as shown in Fig. 3, 57.95% of the respondents are without work, 29.74% are self-employed and the rest 12.31% are informal sector self-employed returnees. This reflects that a greater number of return migrants are without work and this is one indicator that shows returnees are voluntarily forced to be without work given the experience brought from abroad, such as financial and economic integration until they return. Contrary to this result, Marchetta (2012) and Xu (2010) argued that returnees who became self-employed after return have much longer average migration durations than those who took other wage-earning jobs. They further reported that the occupational choice of the returnee entrepreneurs is more stable over time, and this represents a necessary precondition for temporary migration experiences to produce a lasting employment generation effect in the country of origin. Similarly, Brück et al. (2018) and Hagan and Wassink (2017) also argued that return migrants who successfully acquire and transfer new skills across the migratory circuit often leverage their new knowledge to launch new businesses. They further stated that return migrants are associated with a significant increment in the probability of owing business relative to their counterparts. Moreover, this result is inconsistent with the findings of Barrett and Goggin (2010), Batista et al. (2014), and Giambra and Mckenzie (2019).
Association results and discussion between occupational experiences and current occupational status of returnees
This study analysis was conducted by SPSS Statistics 21, where it analyzed chi-square test for association; moreover, we generated the tests for the strength of association, as well as produced adjusted standardized residuals that is used when the chi-square test for association is statistically significant.
Since this study have two variables that each have four categories as we can see from Table 3 (i.e., a 4 × 4 cross tabulation), there are 12 cells in our design that we should evaluate to interpret the data (i.e., 4 × 3 = 12). In this context, there are at least four procedures available to investigate further a statistically significant omnibus chi-square test result. For the purpose of this study the two procedures were discussed. In this regard, the first and easiest of the four procedures is calculating residuals. A residual analysis identifies those specific cells making the greatest contribution to the chi-square test result. A second procedure, comparing cells, evaluates whether specific cells differ from each other. Calculating residuals and comparing cells work for both χ2 tests of goodness of fit and independence.
Accordingly, (Sharpe, 2015) recommends a researcher identify those cells with the largest residuals. A residual is the difference between the observed and expected values for a cell. The larger the residual, the greater the contribution of the cell to the magnitude of the resulting chi-square obtained value. As he further stated “a cell-by-cell comparison of observed and estimated expected frequencies helps us to better understand the nature of the evidence” and cells with large residuals “show a greater discrepancy…than we would expect if the variables were truly independent”. In this regard, as it indicated in Table 3, three cells were associated with adjusted residuals greater than ± 2. Thus, the three cells were the product of self-employed or without work by only one occupational job and the product of self-employed by four and above occupational jobs. One cell associated with self-employed had positive adjusted residual values, indicating that there were more returnees in the self-employed condition for only one occupational job than would be expected by chance. Conversely, the one cell associated with without work had negative adjusted residual values, indicating that there were fewer returnees in without work condition for four and above occupational jobs than would be expected by chance. This indicated that the product of self-employed or without work by only one occupational job and the product of self-employed by four and above occupational jobs were considered contributed to the χ2 values.
A second procedure compares specific cells for a statistically significant difference. Comparing cells is an approach that works for χ2 tests of goodness of fit and independence, and the approach can be conceptualized as a priori or post-hoc depending on whether or not it is preceded by an omnibus χ2 test. In this procedure, subscript letters of cells have used to compare percentage proportions of cells. In this sense, each subscript letter denotes the current occupational status of returnee’s categories whose column proportions do not differ significantly from each other at the 0.05 level if they have the same subscript. However, the proportions within row one on cross tabulation (contingency) Table 3 have not the same subscript which reveals the proportion of only one occupational job has significant differences for the current occupational status of returnees at the 0.05 level and others have not. This indicated that the different subscripts tell us that column proportions in percentage values are not significantly different (Rana & Singhal, 2015).
When reading Table 4, we are interested in the results of the "Pearson Chi-Square" row. We can see that χ2 = 9.560, p = 0.144 which is greater than 0.05 at 5% level of significance (p > α). This tells us that there is no statistically significant association between occupational experiences and occupational status of returnees; that is, returnees who acquired occupational experience abroad does not support to their current occupational status in their home country. Therefore, based on this, the null hypotheses “Experiences gained informally on the job in Saudi Arabia and transferred to the Ethiopian labor market have no positive relationship with business formation following return to Ethiopia” was failed to reject. It was found that occupational experiences gained from abroad was not a significant predictor variable of the current occupational status of returnees. In contrast with the study, by Hagan and Wassink (2017) and Mahe (2019) revealed that work experience strengthened the association between skill transfer and business formation, suggesting the successful formation of new businesses among returnees is the strategic combination of multiple informally acquired skills and techniques brought from abroad. However, most Ethiopian migrants who migrate to Saudi Arabia are homeworkers and with no opportunity to varied skills, have no significant association with the new business formation. However, the finding of Luchyk (2017) is agreed with this result that considering the tough working conditions abroad for return migrants including long hours, the existence of the second job; returnees have poor abilities to be involved in self-employment activities as it needs significant work and commitment after a return. On the other side, this result is inconsistent with the findings of Tibajev (2019) and Xu (2010) who argued that return migrants' occupational experience has been associated with their occupational status after their return to their sending countries.
Phi and Cramer’s V are a measure that provides an estimate of the strength of the association between independent and dependent variables and their coefficient values can be found in the Symmetric Measures of Table 5, as highlighted below.
As it indicated in Table 5 that the Phi is 0.221 and Cramer’s V is 0.157 values, respectively. Phi and Cramer’s V are a measure of the strength of association of a nominal by nominal relationship. Thus, to explain the level of association, Cohen in his early studies (Cohen, 1988) cited in (Sharpe, 2015) suggested the following guidelines for interpreting Phi and Cramer’s V coefficients. In this regard, the intensity of association based on the two values categorized as less than 0.1 value is weak, 0.1–0.3 value is low, 0.3–0.5 value is moderate, 0.5–0.7 value is strong and above 0.7 value is very strong. Hence, based on Phi and Cramer’s V values in Table 5, the intensity of association is weak. It proved that the association between dependent and independent variables are not statistically significant.
Association results and discussion between sectoral experiences and current occupational status of returnees
As it is discussed in the previous section, similar procedure was applied to analyzed chi-square test for association; moreover, we generated the tests for the strength of association, as well as produced adjusted standardized residuals that is used when the chi-square test for association is statistically significant.
Since this study have two variables that each have four and three categories as we can see from Table 6 (i.e., a 4 × 3 cross tabulation), there are 12 cells in our design that we should evaluate to interpret the data (i.e., 4 × 3 = 12). In this context, there are at least four procedures available to investigate further a statistically significant omnibus chi-square test result. For the purpose of this study the two procedures were discussed. In this regard, the first and easiest of the four procedures is calculating residuals. A residual analysis identifies those specific cells making the greatest contribution to the chi-square test result. A second procedure, comparing cells, evaluates whether specific cells differ from each other. Calculating residuals and comparing cells work for both chi-square tests of goodness of fit and independence.
Accordingly, Sharpe (2015) recommends a researcher identify those cells with the largest residuals. A residual is the difference between the observed and expected values for a cell. The larger the residual, the greater the contribution of the cell to the magnitude of the resulting chi-square obtained value. As he further stated “a cell-by-cell comparison of observed and estimated expected frequencies helps us to better understand the nature of the evidence” and cells with large residuals “show a greater discrepancy…than we would expect if the variables were truly independent”. In this regard, as it indicated in Table 6, two cells were associated with adjusted residuals greater than ± 2. Thus, the two cells were the product of without work by only one occupational job and four and above occupational jobs. One cell associated with without work had positive adjusted residual values, indicating that there were more returnees in without work condition for four and above occupational jobs than would be expected by chance. Conversely, the one cell associated with without work had negative adjusted residual values, indicating that there were fewer returnees in without work condition for only one occupational job than would be expected by chance. This indicated that the product of without work by only one occupational job and four and above occupational jobs were considered contributed to the chi-square values.
A second procedure compares specific cells for a statistically significant difference. Comparing cells is an approach that works for chi-square tests of goodness of fit and independence, and the approach can be conceptualized as a priori or post-hoc depending on whether or not it is preceded by an omnibus chi-square test. In this procedure, subscript letters of cells have used to compare percentage proportions of cells. In this sense, subscript letter denotes that current occupational status of returnee’s categories whose relative proportions do not differ significantly from each other at the 0.05 level if they have the same subscript. With this regard, the relative proportions within each cell on the contingency Table 6 has the same subscript which reveals that all cells do not differ significantly from each other at the 0.05 level. This proved that different subscripts tell us about column proportions in percentage values are not significantly different (Pandis, 2016).
As it indicated in Table 7, we are interested in the results of the "Pearson Chi-Square" row. We can see that X2(6) = 9.449, p = 0.150 which is greater than 0.05 at 5% level of significance (p > α). This tells us that there is no statistically significant association between sectoral experiences and occupational status of returnees; that is, returnees who acquired sectoral experience abroad does not support to their current occupational status in their home country. Therefore, based on this, the null hypotheses “Experiences gained informally on the job in Saudi Arabia and transferred to the Ethiopian labor market have no positive relationship with business formation following return to Ethiopia” was failed to reject. It was found that sectoral experiences gained from abroad was not a significant predictor variable of the current occupational status of returnees. It proved that return migrant’s abroad experience could not valuable to become self-employed in their home country. This result is inconsistent with the finding of Mahe (2019) that the returnees having many sectoral experiences abroad temporarily significantly increases the probability of self-employment upon return with a unit increase in sectoral experiences. Similarly, the current result is not similar to the findings of Bensassi and Jabbour (2017), Mahuteau and Tani (2011), and Tibajev (2019).
In the same vein, Phi and Cramer’s V are a measure that provides an estimate of the strength of the association between independent and dependent variables and their values can be found in the Symmetric Measures of Table 8, as highlighted below.
As it indicated in Table 8 that the Phi is 0.220 and Cramer’s V is 0.156 values, respectively. Phi and Cramer’s V are a measure of the strength of association of a nominal by nominal relationship. Thus, to explain the level of association, Cohen in his early studies (Cohen, 1988) cited in (Sharpe, 2015) suggested the following guidelines for interpreting Phi and Cramer’s V coefficients. In this regard, the intensity of association based on the two values categorized as less than 0.1 value is weak, 0.1–0.3 value is low, 0.3–0.5 value is moderate, 0.5–0.7 value is strong and above 0.7 value is very strong. Hence, based on Phi and Cramer’s V values in Table 8, the intensity of association is weak. It proved that the association between dependent and independent variables are not statistically significant.
Return migration is one of the emerged issues of this contemporary world that needs strong emphasis by international and national organizations to understand its implication on the economy of host and sending communities (Bachtiar & Prasetyo, 2017; Wassink & Hagan, 2018). In this regard, this study attempted to contribute to the existing literature on return migration by framing the discussion within the association between self-employment and returning migrants in the context of Ethiopia particularly on Gondar city youth returnees. This is important, because an analysis of the dynamics of the association between returning migrants and self-employment is a crucial step toward enhancing our understanding of the processes in developing countries particularly in the sub-Saharan African countries associated with their socioeconomic reintegration after arrival in home countries. To this end, the study tried to associate self-employment and return migrants by considering sectoral and occupational experiences as an indicator. Consequently, the result revealed that there is no association between self-employment and return migrants in the context of Ethiopia particularly in Gondar city. More importantly, the study was found that sectoral and occupational experience gained from abroad do not help return migrants for new business formation. This result suggests, even though returnees have work experiences, they did not use it. Because experiences need commitment and a favorable business environment to apply these experiences on business activities. Unfortunately, this study in the context of Ethiopia is not consistent with other previous studies conducted in most developing countries particularly in Africa and Latina America (Bensassi & Jabbour, 2017; Black & Castaldo, 2009; Brück et al., 2018; Giambra & Mckenzie, 2019; Mahe, 2019; Tibajev, 2019; Wassink & Hagan, 2018). In general, when tried to associate between self-employment and return migrants in terms of occupational and sectoral experiences in the home country (Ethiopia), this study failed to find any evidence on the association between self-employment and returnees in terms of occupational and sectoral experiences, as has been found in the above mentioned previous studies.
Policy implication and recommendation
Supporting return migrants once they are back to increase their businesses might also be an opportunity insuring that migrants return with the necessary skills and capital will bring economic development if we utilize it properly. However, in this study returnee’s experience is not being considered while supporting to create their business. Thus, policymakers need to consider self-employment carefully to support returnees' sustainable entrepreneurial performance and economic growth. This is specifically relevant in Ethiopia, where self-employment will become a greater part of the labor market. This indicated that policymakers should confront some of the many challenges that self-employed returnees have been faced, including the provision of the working area, formal credit, and training consistent with the experience brought from abroad, and tax incentives to enhance the positive effects on labor market performance due to accumulated human capital and savings. Hence, most of the migrants in this study are women, and the labor law is applied for the entire labor force, it did not consider vulnerable women, so that it has to provide some specific arrangements for vulnerable women like improved working conditions for women.
Areas of future research
Since this research was conducted in Gondar city, it is micro-level research. Thus, further research is needed to fully understand the situation of self-employment and business ownership of return migration at a macro level to adjust employment and entrepreneurship policies. An extension of this study could be conducted on the role of the local economy on returnees' entrepreneurial business performance.
Availability of data and materials
The data is included in the manuscript.
International Migration Organization
Micro and Small Enterprises
Bachtiar, P. P., & Prasetyo, D. D. (2017). Return migration and various reintegration programs for low-skilled migrant workers in Indonesia.
Barrett, A., & Goggin, J. (2010). Returning to the question of a wage premium for returning migrants (Issue 4736).
Batista, C., McIndoe-Calder, T., & Vicente, P. C. (2014). Return migration, self-selection and entrepreneurship in Mozambique (Issue 8195).
Bensassi, S., & Jabbour, L. (2017). Return migration and entrepreneurial success: An empirical analysis for Egypt.
Betseha, M. (2016). Exploring the aftermath of forced mass return: reintegration challenges of deported ethiopian migrant workers from Saudi Arabia. A Thesis Submitted to the School of Graduate Studies of Addis Ababa University in Partial Fulfillment of the Requirements for the Degree of Master of Arts in Peace and Security Studies.
Bigsten, A., Mengistae, T., & Shimeles, A. (2013). Labor market integration in urban Ethiopia, 1994–2004. The University of Chicago, 1994–2004.
Bilgili, O., Kuschminderz, K., & Siegel, M. (2018). Return migrants’ perceptions of living conditions in Ethiopia: A gendered analysis. Migration Studies, 6(3), 345–366. https://doi.org/10.1093/migration/mnx050
Black, R., & Castaldo, A. (2009). Return migration and entrepreneurship in Ghana and Côte D’ivoire: The role of capital transfers. Tijdschrift Voor Economische En Sociale Geografi, 100(1), 44–58.
Bovenkerk, F. (2012). The sociology of return migration: A bibliographic essay. In: Beyer, G., 17 Pauwenlaan The Hague.<
Brück, T., Mahé, C., & Naudé, W. (2018). Return Migration and Self-Employment : Evidence from Kyrgyzstan (Issue IZA DP No. 11332).
Chen, J., Kosec, K., & Mueller, V. (2019). Moving to despair? Migration and well-being in Pakistan. World Development, 113, 186–203. https://doi.org/10.1016/j.worlddev.2018.09.007
Cohen, J. H. (1988). Consequences of migration and remittances for mexican transnational communities. Journal of Economic Geography, 74(1), 26–44. https://doi.org/10.1111/j.1944-8287.1998.tb00103.x.
CSA. (2020). The Federal Democratic Republic Of Ethiopia Central Statistical Agency Key Findings On The 2020 Urban Employment Unemployment Survey (Issue May).
Cui, Y., and Nahm, D., & Tani, M. (2013). Self-employment in China: Are rural migrant workers and urban residents alike?. IZA Discussion Paper No. 7191, Available at SSRN: https://ssrn.com/abstract=2210851.
Gebremariam, T., Berihun, T., & Hagos, T. (2018). Illegal human migration: Socioeconomic re-integration challenges in North. Research Journal of Social Science and Management, 8(6), 49–56.
Getaneh, G. (2020). Determinants of urban youth unemploymen: A case in central Gondar Zone. MA Thesis, Bahir Dar University, Ethiopia.
Giambra, S., & Mckenzie, D. (2019). DISCUSSION PAPER SERIES: Self-Employment and Migration Self-Employment and Migration (Issue IZA DP No. 12624).
Hagan, J. M., & Wassink, J. (2017). New skills, new jobs: Return migration, skill transfers, and business formation in Mexico. Social Problems, 63(4), 513–533. https://doi.org/10.1093/socpro/spw021.New
Islam, A., Jedwab, R., Romer, P., & Pereira, D. (2019). Returns to Experience and the Sectoral Allocation of Labor. Department of Economics George Washington University Washington, 89408.
Kaur, A. (2010). Labour migration in Southeast Asia: Migration policies, labour exploitation and regulation. Journal of the Asia Pacific Economy, 15(1), 6–19. https://doi.org/10.1080/13547860903488195
Kautto, D. (2019). Social influences in cross-border entrepreneurial migration policy. Journal of International Business Policy, 2(4), 397–412. https://doi.org/10.1057/s42214-019-00040-x
Kone, Z. L., Ruiz, I., & Vargas-silva, C. (2021). Self-employment and reason for migration: Are those who migrate for asylum different from other migrants? Small Business Economics, 56, 947–962.
Kothari, C. R. (2004). Research methodology, methods and techniques (second).
Kourtit, K., Nijkamp, P., & Leeuwen, E. V. (2013). New entrepreneurship in urban diasporas in our modern world. Journal of Urban Management, 2(1), 25–47. https://doi.org/10.1016/S2226-5856(18)30063-3
Kuschminder, K. (2014). Female return migration and reintegration strategies in Female Return Migration and Reintegration Strategies in Ethiopia. Maastricht University. https://doi.org/10.26481/dis.20140910kk
Luchyk, D. (2017). The impact of international work experience on being self-employed after return : evidence of Polish return migrants. Master’s thesis, University Of Tartu.
Mahe´, C. (2019). Return migration and self-employment : Is there a ‘ jack-of-all-trades ’ effect ? (Issues 2017–039).
Mahuteau, S., & Tani, M. (2011). Labour Market Outcomes and Skill Acquisition in the Host Country : North African Migrants Returning Home from the European Union (Issue 5441).
Makina, D. (2012). Determinants of return migration intentions: Evidence from Zimbabwean migrants living in South Africa. Development Southern Africa, 29(3), 365–378. https://doi.org/10.1080/0376835X.2012.706034
Marchetta, F. (2012). Return Migration and the Survival of Entrepreneurial Activities in Egypt.
Mesnard, A. (2004). Temporary migration and self-employment: Evidence from Tunisia. Brussles Economic Review, 47(1), 1–8.
Naudé, W., Siegel, M., & Marchand, K. (2017). Migration, entrepreneurship and development: Critical questions. IZA Journal of Migration. https://doi.org/10.1186/s40176-016-0077-8
Piracha, M. (2015). Occupational choice of return migrants (Issue 197). https://doi.org/10.15185/izawol.197
Rana, R., & Singhal, R. (2015). Chi-square test and its application in hypothesis testing. Journal of the Practice of Cardiovascular Sciences, 1(1), 69–71. https://doi.org/10.4103/2395-5414.157577.
Schewel K. (2021). Migration and development in Ethiopia: Exploring the mechanisms behind an emerging mobility transition. Migration Studies, 9(4), 1673–1707. https://doi.org/10.1093/migration/mnab036.
Sharpe, D. (2015). Chi-square test is statistically significant: Now what ? Practical Assessment, Research, and Evaluation. https://doi.org/10.7275/tbfa-x148
Taherdoost, H. (2017). Determining sample size;How to calculate survey sample size. International Journal of Economics and Management Systems, 2(2), 237–239. http://www.iaras.org/iaras/journals/ijems.
Tegenu, H., Gebrehiwot, M., Azanaw, J., & Akalu, T. Y. (2021). Associated factors among restaurant workers in Gondar City, Northwest Ethiopia, 2020. Journal of Environmental and Public Health, 1–9.
Tenkorang, J. A. (2014). Factors Associated with return migration to the Wa Municipality. Masters Dissertation. University of Ghana, Legon.
Thomas, K. J. A. (2008). Return migration in africa and the relationship between educational attainment and labor market success: Evidence from Uganda. International Migration Review, 42(3), 652–674. https://doi.org/10.1111/j.1747-7379.2008.00141.x.
Tibajev, A. (2019). Linking self-employment before and after migration: Migrant selection and human capital. Sociological Science, 6, 609–634.
Valenta, M. (2022). The drivers and trajectories of Nepalese multiple migrations to the Arab Gulf. South Asian Diaspora, 14(1), 21–37. https://doi.org/10.1080/19438192.2022.2033918.
Wassink, J. T., & Hagan, J. M. (2018). A dynamic model of self-employment and socioeconomic mobility among return migrants: The case of urban Mexico. Social Forces, 96(3), 1069–1096. https://doi.org/10.1093/sf/sox095.A
Wickramasekara, P. (2019). Effective return and reintegration of migrant workers with special focus on ASEAN Member States.
Xu, H. (2010). Return migration, occupational change, and self-employment: The case of Wuwei County. China Perspectives, 4, 71–86.
I would like to thank the research participants who are lived in Gondar city for their willingness to give information to the research question. I like to acknowledge Amelework for her language editorial works and her genuine comments and corrections which help the paper to be in its present form.
This study was conducted by the Author finance only. There is no financial support from any organization.
Ethics approval and consent to participate
Not applicable since this research did not involve human subjects.
Consent for publication
I have agreed to submit for the Journal of Innovation and Entrepreneurship and approved the manuscript for submission.
The author declares that there are no competing interests.
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
About this article
Cite this article
Alene, E.T. Examine the association between self-employment and return migrants in Ethiopia: evidence from Gondar city youth returnees. J Innov Entrep 12, 28 (2023). https://doi.org/10.1186/s13731-023-00288-x