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AbstractOne of the most debated issues in migration economics regards the effects of remittances in receiving countries. In this paper, we test whether the economic complexity of a country is relevant for understanding the impact of remittances on new firms' birth. We find evidence that the impact of real per capita remittances on new firms' creation is inversely mediated by economic complexity. More (less) complex economies generate opportunities to found new firms which need high (low) funding. Since economic complexity is positively correlated with economic development, remittances are more likely to facilitate the establishment of new firms in less developed economies rather than in more advanced ones. We also examine the link between remittances and new firm creation for Africa, Asia, Europe, and Latin America and the Caribbean countries, finding very heterogeneous patterns. Hence, policy implications aiming at attracting remittances to create new firms should respond to the challenges posed by specific countries and be tailored to their peculiar needs. Countries of origin should build institutions and facilitate the creation of networks to bridge the diaspora abroad with their home country to increase awareness of new business opportunities. Policy initiatives could spur investment in the formal economy by making regulations less stringent, discouraging the use of remittances for consumption purposes, reducing informality, improving competition, reducing remittance transfer costs, and giving incentives to new firms created through remittances.

We investigate internal migration across Italian regions and provide empirical evidence that the share of young population, per capita GDP, unemployment rate and migrants' human capital are the main determinants of migration flows across Italian regions from 1970 to 2002. We deal with the issues of non‐stationarity and co‐integration and estimate an error‐correction model in which both the short‐ and long‐run dynamics are modelled simultaneously. As far as the accommodating potential of internal migration to regional unbalances is concerned, we detect little room for such a role. Indeed, the degree of labour mobility across Italian regions cannot be active as an effective equilibrating mechanism.