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Labor market outcomes, capital accumulation, and return migration: Evidence from immigrants in Germany

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  • Kirdar, Murat
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    Abstract

    In this paper I test the capital accumulation conjecture that is used to rationalize return migration decisions in the context of immigrants in Germany and examine how labor market outcomes influence return migration decisions, with particular attention to selection in these outcomes in return migration. I characterize the level and timing of return migration as well as the selection in it and derive a number of implications of these on the impact of immigrants on the host as well as source countries. Using a rich longitudinal dataset that has an over-sampled group of immigrants (German Socioeconomic Panel), I conduct a Cox proportional hazard analysis with alternative waiting-time concepts. That the sample contains immigrants from four different source countries allows me to utilize the variation in the source country characteristics as well as the time variation in them to identify the parameters of interest. I find evidence for the savings accumulation conjecture, in which return is motivated by higher purchasing power of accumulated savings in the home country. On the other hand, human capital accumulation conjecture is rejected. In the framework of savings accumulation, I examine the impact of an increase in German earnings whose theoretical impact on the return migration decision is ambiguous. In terms of labor market outcomes, both retirement and unemployment emerge as important determinants of return migration choices. Unemployment spell length determines the direction of selection with respect to unemployment in return migration. The data also reveal that the level of return migration is high and varies considerably across the source countries. The hazard function of Turkish immigrants displays a hump-shaped profile that peaks between the ages of 45 and 54 whereas EU immigrants are more likely to return at earlier ages and after retirement.

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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2028.

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    Date of creation: Jan 2007
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    Handle: RePEc:pra:mprapa:2028

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    Keywords: International Migration; Capital Accumulation; Unemployment; Duration Analysis;

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    References

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    1. Bellemare, C., 2003. "Economic Assimilation and Outmigration of Immigrants in West-Germany," Discussion Paper, Tilburg University, Center for Economic Research 2003-65, Tilburg University, Center for Economic Research.
    2. Borjas, George J & Bratsberg, Bernt, 1996. "Who Leaves? The Outmigration of the Foreign-Born," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 165-76, February.
    3. Tunali, Insan, 2000. "Rationality of Migration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 893-920, November.
    4. Amelie Constant & Douglas S. Massey, 2003. "Self-selection, earnings, and out-migration: A longitudinal study of immigrants to Germany," Journal of Population Economics, Springer, Springer, vol. 16(4), pages 631-653, November.
    5. Jörgen Hansen & Magnus Lofstrom, 2010. "Immigrant Assimilation and Welfare Participation: Do Immigrants Assimilate Into or Out-of Welfare," Working Papers id:2647, eSocialSciences.
    6. Riphahn, Regina, 1999. "Immigrant Participation in Social Assistance Programs: Evidence from German Guestworkers," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2318, C.E.P.R. Discussion Papers.
    7. Abdurrahman Aydemir & Chris Robinson, 2008. "Global labour markets, return, and onward migration," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 41(4), pages 1285-1311, November.
    8. Kumcu, M. Ercan, 1989. "The savings behavior of migrant workers : Turkish workers in W. Germany," Journal of Development Economics, Elsevier, Elsevier, vol. 30(2), pages 273-286, April.
    9. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
    10. Dustmann, Christian & Kirchkamp, Oliver, 2000. "The Optimal Migration Duration and Activity Choice after Re-migration," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 00-39, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    11. Storesletten, Kjetil, 1998. "Sustaining Fiscal Policy Through Immigration," Seminar Papers, Stockholm University, Institute for International Economic Studies 664, Stockholm University, Institute for International Economic Studies.
    12. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    13. Dustmann, Christian, 2001. "Return Migration, Wage Differentials, and the Optimal Migration Duration," IZA Discussion Papers 264, Institute for the Study of Labor (IZA).
    14. Djajic, Slobodan, 1989. "Migrants in a guest-worker system : A utility maximizing approach," Journal of Development Economics, Elsevier, Elsevier, vol. 31(2), pages 327-339, October.
    15. Murat G. Kirdar, 2005. "Return Migration and Saving Behavior of Foreign Workers in Germany," ERC Working Papers, ERC - Economic Research Center, Middle East Technical University 0506, ERC - Economic Research Center, Middle East Technical University, revised Nov 2005.
    16. Richard B. Freeman & Remco Oostendorp, 2000. "Wages Around the World: Pay Across Occupations and Countries," NBER Working Papers 8058, National Bureau of Economic Research, Inc.
    17. Tunali, Insan & Pritchett, Jonathan B, 1997. "Cox Regression with Alternative Concepts of Waiting Time: The New Orleans Yellow Fever Epidemic of 1853," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 12(1), pages 1-25, Jan.-Feb..
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