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Investment Opportunities in the Source Country and Temporary Migration

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Abstract

This paper examines how attractive investment opportunities available to temporary migrants in their country of origin a¤ect their saving behavior and the optimal duration of stay abroad. The model predicts an inverse U-shaped relationship between migration duration and the expected rate of return on repatriated savings. A higher rate provides an incentive to go back earlier and consume less abroad, while it can also trigger emigration aimed at generating the savings required for investment after return. At a more general level, the paper illustrates how the behavior of temporary migrants re?ects the interaction between their preferences and the opportunities available in the labor and capital markets of both countries.

Suggested Citation

  • Slobodan Djajic, 2008. "Investment Opportunities in the Source Country and Temporary Migration," IHEID Working Papers 06-2009, Economics Section, The Graduate Institute of International Studies, revised May 2009.
  • Handle: RePEc:gii:giihei:heidwp06-2009
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    File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP06-2009.pdf
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    References listed on IDEAS

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    1. Galor, Oded & Stark, Oded, 1990. "Migrants' Savings, the Probability of Return Migration and Migrants' Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 463-467, May.
    2. de Brauw, Alan & Rozelle, Scott, 2008. "Migration and household investment in rural China," China Economic Review, Elsevier, vol. 19(2), pages 320-335, June.
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    More about this item

    Keywords

    International migration; Remittances; Return migration;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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