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

Oded Stark, Christian Helmenstein and Yury Yegorov
Additional contact information
Christian Helmenstein: Institute for Advanced Studies
Yury Yegorov: University Pompeu Fabra

International Tax and Public Finance, 1997, vol. 4, issue 3, No 6, 307-324

Abstract: 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.

Keywords: Negative Relationship; Public Finance; Utility Maximization; Power Parity; Purchasing Power Parity (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (33)

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Journal Article: Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration (1997)
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DOI: 10.1023/A:1008616421523

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