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The Return Motivations of Legal Permanent Migrants: Evidence from Exchange Rate Shocks and Immigrants in Australia

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  • Abarcar, Paolo

Abstract

Why do legal permanent migrants return to their home countries? How do home country conditions influence this decision? This paper uses exogenous home country exchange rate shocks arising from the 1997 Asian Financial Crisis to distinguish return motivations of a national sample of Australian immigrants. On average, a 10% favorable exchange rate shock (a depreciation in the home country currency) leads to a reduced likelihood of return of 0.37 percentage points for migrants. The effect is found to be stronger for those who had pre-existing intentions to return, weaker for those undecided, and zero for those who initially stated their desire to stay. These results favor a life-cycle explanation for migrant behavior and reject the theory that migrants are target earners who seek to invest upon return home.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 47832.

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Date of creation: 25 Jun 2013
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Handle: RePEc:pra:mprapa:47832

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Keywords: return migration; exchange rates; Asian Financial Crisis; migrants; immigrants;

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  1. Murat Kirdar, 2010. "Source Country Characteristics and Immigrants’ Migration Duration and Saving Decisions," Koç University-TUSIAD Economic Research Forum Working Papers 1010, Koc University-TUSIAD Economic Research Forum.
  2. Gunawardana, Pemasiri, 2005. "The Asian Currency Crisis and Australian Exports to East Asia," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 35(1-2), pages 73-90, March/Sep.
  3. Stark, Oded & Helmenstein, Christian & Yegorov, Yuri, 1997. "Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration," Economics Series 44, Institute for Advanced Studies.
  4. Dustmann, Christian, 2003. "Return migration, wage differentials, and the optimal migration duration," European Economic Review, Elsevier, vol. 47(2), pages 353-369, April.
  5. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
  6. Makin, Tony, 1999. "The Asian Currency Crisis and the Australian Economy," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 29(1), pages 77-85, March.
  7. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  8. Christian Dustmann & Yoram Weiss, 2007. "Return Migration: Theory and Empirical Evidence from the UK," British Journal of Industrial Relations, London School of Economics, vol. 45(2), pages 236-256, 06.
  9. Guillermina Jasso & Mark Rosenzweig, 1982. "Estimating the emigration rates of legal immigrants using administrative and survey data: The 1971 cohort of immigrants to the United States," Demography, Springer, vol. 19(3), pages 279-290, August.
  10. Gibson, John & McKenzie, David, 2009. "The microeconomic determinants of emigration and return migration of the best and brightest : evidence from the Pacific," Policy Research Working Paper Series 4965, The World Bank.
  11. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc.
  12. Alice Mesnard, 2004. "Temporary migration and capital market imperfections," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 242-262, April.
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