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Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration

Author

Listed:
  • Stark, Oded

    (Department of Economics, University of Oslo)

  • Helmenstein, Christian

    (Department of Finance, Institute for Advanced Studies, Vienna)

  • Yegorov, Yuri

    (University Pompeu Fabra, Barcelona, Spain)

Abstract

If some of the returns to migration accrue from return migration, the optimal duration of migration may be shorter than the feasible duration of migration. We develop a model that provides and highlights conditions under which return migration takes place even though a reversal of the inter-country wage differential does not occur. In particular, we consider the higher purchasing power of savings (generated from work abroad) at home than abroad as a motive for return migration. Inter alia, our model produces a negative relationship between the optimal duration of migration and the purchasing power differential and in some (but not all) cases, a negative relationship between the optimal duration of migration and the wage abroad. In addition, and contrary to our prior anticipation, our utility maximization analysis suggests that East-West migration will tend to be temporary while inter-European Community (or intra-West European) migration will likely be permanent.

Suggested Citation

  • Stark, Oded & Helmenstein, Christian & Yegorov, Yuri, 1997. "Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration," Economics Series 44, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:44
    as

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    File URL: https://irihs.ihs.ac.at/id/eprint/984
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    References listed on IDEAS

    as
    1. Stark, Oded, 1995. "Return and Dynamics: The Path of Labor Migration when Workers Differ in their Skills and Information Is Asymmetric," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 97(1), pages 55-71.
    2. George J. Borjas & Bernt Bratsberg, 2021. "Who Leaves? The Outmigration Of The Foreign-Born," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 5, pages 93-104, World Scientific Publishing Co. Pte. Ltd..
    3. Pratt, John W & Zeckhauser, Richard J, 1987. "Proper Risk Aversion," Econometrica, Econometric Society, vol. 55(1), pages 143-154, January.
    4. Kimball, Miles S, 1993. "Standard Risk Aversion," Econometrica, Econometric Society, vol. 61(3), pages 589-611, May.
    5. Oded Stark, 1991. "The Migration of Labor," Blackwell Books, Wiley Blackwell, number 1557860300, April.
    6. repec:bla:scandj:v:97:y:1995:i:1:p:55-71 is not listed on IDEAS
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    More about this item

    Keywords

    Return Migration; Migrants' Savings; Purchasing Power Differentials;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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