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Investment opportunities in the source country and temporary migration

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  • Slobodan Djajić

Abstract

This paper examines how attractive investment opportunities available to temporary migrants at home affect their saving behaviour and the optimal duration of stay abroad. The model predicts an inverse U‐shaped relationship between migration duration and the expected rate of return on repatriated savings. A higher rate provides an incentive to go back earlier and consume less abroad, while it can also trigger emigration aimed at generating the savings required for investment after return. The paper illustrates how the behaviour of temporary migrants reflects the interaction between their preferences and the opportunities available in labour and capital markets of both countries. Ce mémoire examine comment les occasions d'investissement des émigrants temporaires dans leur pays d'origine affectent leur comportement d'épargne et la durée optimale de leur séjour à l'étranger. Le modèle prédit une relation en U inversé entre la durée du séjour à l'étranger et le taux de rendement anticipé sur les épargnes rapatriées. Un taux plus élevé incite à revenir plus tôt et à consommer moins à l'étranger, mais il peut aussi déclencher l'émigration destinée à engendrer les épargnes requises pour pouvoir investir au retour. Le mémoire illustre comment le comportement des migrants temporaires reflète l'interaction entre leurs préférences et les possibilités offertes par les marchés du travail et du capital des deux pays.

Suggested Citation

  • Slobodan Djajić, 2010. "Investment opportunities in the source country and temporary migration," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(2), pages 663-682, May.
    • Handle: RePEc:wly:canjec:v:43:y:2010:i:2:p:663-682
    DOI: 10.1111/j.1540-5982.2010.01588.x
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    Cited by:

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    2. Alex Armstrong & Frank D. Lewis, 2012. "International migration with capital constraints: interpreting migration from the Netherlands to Canada in the 1920s," Canadian Journal of Economics, Canadian Economics Association, vol. 45(2), pages 732-754, May.
    3. Bossavie, Laurent & Görlach, Joseph-Simon & Özden, Çağlar & Wang, He, 2024. "Capital Markets, Temporary Migration and Entrepreneurship: Evidence from Bangladesh," World Development, Elsevier, vol. 176(C).
    4. Akay, Alpaslan & Brausmann, Alexandra & Djajić, Slobodan & Kırdar, Murat G., 2021. "Purchasing-power-parity and the saving behavior of temporary migrants," European Economic Review, Elsevier, vol. 134(C).
    5. Chaitali Sinha, 2017. "International Migration and Welfare Implications," South Asian Journal of Macroeconomics and Public Finance, , vol. 6(2), pages 209-229, December.

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