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

Oded Stark, Christian Helmenstein and Yuri Yegorov
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Christian Helmenstein: Department of Finance, Institute for Advanced Studies, Vienna

No 44, Economics Series from Institute for Advanced Studies

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: Return Migration; Migrants' Savings; Purchasing Power Differentials (search for similar items in EconPapers)
JEL-codes: F22 J61 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997-06
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Citations: View citations in EconPapers (56)

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https://irihs.ihs.ac.at/id/eprint/984 First version, 1997 (application/pdf)

Related works:
Journal Article: Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration (1997)
Journal Article: Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration (1997)
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