Recent emigrant waves and the institutional quality of origin country: evidence from Greece

This study investigates the impact of the recent wave of emigration from Greece on the country’s institutional quality. Using data on emigrant outflows from 1996 to 2022 alongside the World Bank’s Worldwide Governance Indicators, specifically focusing on Voice and Accountability and Control of Corruption indicators, we find a negative effect of the Greek emigration on the country’s institutional quality. To address potential endogeneity of emigrants’ outflow, we employ a shift-share instrument based on the allocation of Greek emigrants to the principal destination countries of the post-war emigration wave in the early 1960s. Our findings remain robust to alternate controls, through which we further demonstrate that the above negative effect is amplified during the 2008 financial crisis. Additionally, we find no statistically significant positive or negative effect of norm transfer from emigrants to Greece on institutional quality. We finally discuss significant policy implications of our results.