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International migration under incomplete information: a re-migration analysis

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  • Li, Yang

Abstract

This study focuses on re-migration, where individuals return to their place of birth after living in a new location for several years. The objectives of the study are (1) formulate a multiperiod finite-life utility maximization model of an individual's migration decisions, given incomplete information about wage rates and quality of life in new locations, (2) provide econometrics evidence about the contribution of personal and local-area attributes to the hazard rate for re-migration of Puerto Rican born male householders living on the U.S. mainland and returning to Puerto Rico during the 1980s, and (3) provide econometrics evidence on structural differences/changes in wage/earning equations between and within major U.S. ethnic/racial groups (Hispanic, black, and white) in the 1980s;First, a highly stylized five period life-time model of individual decision making is developed where utility depends on the wage and/or quality of life and retirement always occurs in the fifth period. Re-migration is triggered by unfulfilled wage or quality of life expectations, unemployment, and approaching retirement. Second, the U.S. PUMS data for Puerto Rico-born male householders, age 18 to 64 in 1990, residing on the U.S. mainland and re-migrating to Puerto Rico during the 1980s is the sample for fitting a hazard rate model of re-migration. We find a strong quadratic effect of an individual's age, which supports the finite-life conceptual model. Also, males having English proficiency, less schooling, and working disability are less likely to re-migrate. A higher predicted job growth rate for Puerto Rico (U.S. mainland) and unemployment rate for the mainland (Puerto Rico) have positive (negative) effects on the hazard rate. The Puerto Rican real minimum wage is negatively related to the hazard rate. Third, we find that the cohort effect (year of immigration) was the only part of the return on personal attributes that has changed significantly during the 1980s using the 1980 and 1990 PUMS data for Hispanic male householders. There is, however, evidence of significant change in contributions of local labor market conditions to earnings of all groups during the 1980s. Test of structural equality across racial/ethnic groups are rejected.

Suggested Citation

  • Li, Yang, 1996. "International migration under incomplete information: a re-migration analysis," ISU General Staff Papers 1996010108000012549, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1996010108000012549
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    Cited by:

    1. Li, Yang & Huffman, Wallace E., 1999. "International Re-Migration Analysis: Evidence from Puerto Ricans," ISU General Staff Papers 199904010800001322, Iowa State University, Department of Economics.

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