Return Migration and Saving Behavior of Foreign Workers in Germany

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Return Migration and Saving Behavior of Foreign Workers in Germany

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Murat G. Kirdar () (Department of Economics, METU)

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Murat Kirdar

Abstract

In this paper, I develop a dynamic stochastic model of joint return migration and saving decisions that accounts for uncertainty in future employment and income and estimate this model using a longitudinal dataset on legal immigrants in Germany. The model gives a number of implications about the level, timing and selection of return migration as well as asset accumulation of immigrants according to their country of origin We also calculate the net lifetime contributions of immigrants to the pension and unemployment insurance systems of the host country. The estimated model is used to determine the impact of a number of counterfactual policy experiments on the return and savings behavior of immigrants as well as on their net contribution to the social security system. These counterfactuals include changes in the unemployment insurance program, payment of bonuses to selected groups to encourage return home, and exchange rate premiums by the source countries. In addition, I assess the impact of counterfactuals in the macroeconomic environment, like changes in wages in Germany and in purchasing power parity between Germany and the source countries.

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Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 0506.

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Length: 69 pages
Date of creation: Nov 2005
Date of revision: Nov 2005
Handle: RePEc:met:wpaper:0506

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Find related papers by JEL classification:
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-05-20 (All new papers)
NEP-DGE-2006-05-20 (Dynamic General Equilibrium)
NEP-FMK-2006-05-20 (Financial Markets)

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Murat G. Kirdar, 2007. "Labor Market Outcomes, Capital Accumulation, and Return Migration: Evidence from Immigrants in Germany," ERC Working Papers 0703, ERC - Economic Research Center, Middle East Technical University, revised Jan 2007. [Downloadable!]
Other versions:
- Kirdar, Murat, 2007. "Labor market outcomes, capital accumulation, and return migration: Evidence from immigrants in Germany," MPRA Paper 2028, University Library of Munich, Germany. [Downloadable!]

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