This paper examines how immigrants' migration duration and saving decisions in the host country respond to changes in purchasing power parity (ppp) as well as in the wage ratio between the host and source countries. For this purpose, I develop a model of immigrants' joint migration duration and saving decisions and derive comparative static results regarding the impact of ppp and wage ratio on these decisions. An interesting implication of the theoretical model is that immigrants may in fact stay longer in the host country as a result of an increase in ppp, in particular those with a low degree of relative risk aversion. I test the implications of this model using a longitudinal data set that includes immigrants from four different source countries in Germany and employing panel data estimation methods. The empirical results reveal that an increase in ppp decreases the optimal migration duration. Moreover, optimal migration duration is elastic with respect to ppp. An interesting empirical finding is that, holding individual immigrant characteristics constant, immigrants from poorer source countries have a shorter migration duration than immigrants from wealthier source countries. The empirical results also reveal that ppp has a positive effect on saving rate, which is consistent with the implications of the model, and that saving rate is also elastic with respect to ppp.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
13322.
Find related papers by JEL classification: F22 - International Economics - - International Factor Movements and International Business - - - International Migration J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
This paper has been announced in the following NEP Reports:
References listed on IDEAS 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.:
Timothy Hatton & Jeffery Williamson, 2002.
"What Fundamentals Drive World Migration?,"
CEPR Discussion Papers
458, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University.
[Downloadable!]
Other versions: