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

Oded Stark, Christian Helmenstein and Yuri Yegorov

International Tax and Public Finance, 1997, vol. 4, issue 3, 307-324

Abstract: If some of the returns to migration accrue from returnmigration, the optimal duration of migration may be shorter thanthe feasible duration of migration. We develop a model that providesand highlights conditions under which return migration takesplace even though a reversal of the inter-country wage differentialdoes not occur. In particular, we consider the higher purchasingpower of savings (generated from work abroad) at home than abroadas a motive for return migration. Inter alia, our model producesa negative relationship between the optimal duration of migrationand the purchasing power differential and in some (but not all)cases, a negative relationship between the optimal duration ofmigration and the wage abroad. In addition, and contrary to ourprior anticipation, our utility maximization analysis suggeststhat East-West migration will tend to be temporary while inter-EuropeanCommunity (or intra-West European) migration will likely be permanent. Copyright Kluwer Academic Publishers 1997

Date: 1997
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Journal Article: Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration (1997)
Working Paper: 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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