Repatriations and Firm Behavior: Effects of Repatriated Migrants with Large Networks

Can repatriation inflows impact firm behavior in origin countries? To the extent that repatriated individuals bring large networks and know-how they can benefit local firms. We examine this question in the context of repatriation inflows from the United States and Mexico to El Salvador. For this purpose, we combine longitudinal firm-level panel data with inflows of repatriations exploiting municipal and annual variation during the period 2010 to 2017. Our empirical strategy combines variation in the municipality of birth of individuals repatriated in the period 1995-2002, with annual variation on aggregate inflows of repatriations to El Salvador. We find that repatriations increased firm growth through an increment in the number of branches, higher exports, and value-added per worker. We also document that repatriations caused a mechanic increase in the overall supply of labor reducing wages and increasing employment.