The U-Shaped Self-Selection of Return Migrants

Return migrants often come from either the top or bottom part of the foreign-born income distribution, leading to a U-shaped pattern of self-selection. A common explanation for the U-shape is that the low-earners return home because they fail in the labor market, while the high-earners return home because they quickly hit savings targets. However, a simple model demonstrates that the self-selection of return migrants is U-shaped if the costs of migration are higher for low-skilled individuals. I test this model using data on migrants' intentions to return home, which are formed prior to potentially failing in the labor market. In addition to proposing that this model explains the U-shape found in many contemporary datasets, I show that the U-shape exists for a sample of migrants entering Ellis Island during the early 20th century.