Why Do Migrants Return to Poor Countries? Evidence from Philippine Migrants’ Responses to Exchange Rate Shocks
Why would migrant workers in rich countries ever return to poorer countries of origin? In a model of migration and household investment, with borrowing constraints and minimum investment thresholds, return migration occurs for either target-earnings or life-cycle reasons. This paper exploits a unique quasi-experiment to distinguish between these potential explanations for return migration. I examine how the return decisions of Philippine migrants respond to major and unexpected exchange rate shocks (due to the 1997 Asian financial crisis). Overall, the evidence favors the life-cycle explanation: more favorable exchange rate shocks lead to fewer migrant returns. A 10% improvement in the exchange rate reduces the 12-month return rate by 1.4 percentage points. However, there is evidence that some migrants are motivated by target-earnings considerations: for households with intermediate levels of foreign earnings, more favorable exchange rate shocks have the least effect on return migration, but lead to increases in entrepreneurial income, real property purchases, and vehicle ownership. Overall, the findings are at odds with a model with relaxed constraints on borrowing for household investment.
|Date of creation:||2004|
|Contact details of provider:|| Postal: ANN ARBOR MICHIGAN 48109|
Phone: (734) 764-3490
Fax: (734) 763-9181
Web page: http://fordschool.umich.edu/rsie/
More information through EDIRC
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 J. Hatton & Jeffrey G. Williamson, 2002.
"What Fundamentals Drive World Migration?,"
NBER Working Papers
9159, National Bureau of Economic Research, Inc.
- Hatton, Timothy J. & Williamson, Jeffrey G., 2003. "What Fundamentals Drive World Migration?," WIDER Working Paper Series 023, World Institute for Development Economic Research (UNU-WIDER).
- Timothy Hatton & Jeffery Williamson, 2002. "What Fundamentals Drive World Migration?," CEPR Discussion Papers 458, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Hatton, Timothy J. & Williamson, Jeffrey G, 2002. "What Fundamentals Drive World Migration?," CEPR Discussion Papers 3559, C.E.P.R. Discussion Papers.
- Colin Camerer & Linda Babcock & George Loewenstein & Richard Thaler, 1997.
"Labor Supply of New York City Cabdrivers: One Day at a Time,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 112(2), pages 407-441.
- Camerer, Colin & Babcock, Linda & Loewenstein, George & Thaler, Richard, 1996. "Labor Supply of New York City Cab Drivers: One Day At A time," Working Papers 960, California Institute of Technology, Division of the Humanities and Social Sciences.
- Hill, John K., 1987. "Immigrant decisions concerning duration of stay and migratory frequency," Journal of Development Economics, Elsevier, vol. 25(1), pages 221-234, February.
- Oded Stark & Christian Helmenstein & Yury Yegorov, 1997.
"Migrants' Savings, Purchasing Power Parity, and the Optimal Duration of Migration,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 4(3), pages 307-324, July.
- 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.
- Borjas, George J, 1989. "Immigrant and Emigrant Earnings: A Longitudinal Study," Economic Inquiry, Western Economic Association International, vol. 27(1), pages 21-37, January.
- Rodrik, Dani, 2002. "Feasible Globalizations," CEPR Discussion Papers 3524, C.E.P.R. Discussion Papers.
- Djajic, Slobodan & Milbourne, Ross, 1988. "A general equilibrium model of guest-worker migration : The source-country perspective," Journal of International Economics, Elsevier, vol. 25(3-4), pages 335-351, November.
- Dean Yang, 2004.
"International Migration, Human Capital, and Entrepreneurship: Evidence from Philippine Migrants’ Exchange Rate Shocks,"
531, Research Seminar in International Economics, University of Michigan.
- Yang, Dean, 2005. "International migration, human capital, and entrepreneurship : evidence from Philippine migrants'exchange rate shocks," Policy Research Working Paper Series 3578, The World Bank.
- Dustmann, Christian & Kirchkamp, Oliver, 2002.
"The optimal migration duration and activity choice after re-migration,"
Journal of Development Economics,
Elsevier, vol. 67(2), pages 351-372, April.
- Dustmann, Christian & Kirchkamp, Oliver, 2000. "The Optimal Migration Duration and Activity Choice after Re-migration," Sonderforschungsbereich 504 Publications 00-39, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Dustmann, Christian & Kirchkamp, Oliver, 2000. "The optimal migration duration and activity choice after re-migration," Papers 00-39, Sonderforschungsbreich 504.
- Dustmann, Christian & Kirchkamp, Oliver, 2001. "The Optimal Migration Duration and Activity Choice after Re-migration," IZA Discussion Papers 266, Institute for the Study of Labor (IZA).
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
- DaVanzo, Julie, 1983. "Repeat Migration in the United States: Who Moves Back and Who Moves On?," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 552-559, November.
- Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
- Banerjee, Abhijit V & Newman, Andrew F, 1993.
"Occupational Choice and the Process of Development,"
Journal of Political Economy,
University of Chicago Press, vol. 101(2), pages 274-298, April.
- Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Barry Chiswick & Timothy J. Hatton, 2003.
"International Migration and the Integration of Labor Markets,"
NBER Chapters,in: Globalization in Historical Perspective, pages 65-120
National Bureau of Economic Research, Inc.
- Chiswick, Barry R. & Hatton, Timothy J., 2002. "International Migration and the Integration of Labor Markets," IZA Discussion Papers 559, Institute for the Study of Labor (IZA).
- Lalonde, Robert J. & Topel, Robert H., 1993.
"Economic impact of international migration and the economic performance of migrants,"
Handbook of Population and Family Economics,in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 14, pages 799-850
- Robert J. LaLonde & Robert H. Topel, 1994. "Economic Impact of International Migrationand the Economic Performance of Migrants," University of Chicago - George G. Stigler Center for Study of Economy and State 96, Chicago - Center for Study of Economy and State.
- 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 165-176, February.
- Philippe Aghion & Patrick Bolton, 1997. "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, Oxford University Press, vol. 64(2), pages 151-172.
- 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.
- Oded Galor & Oded Stark, 1989. "Migrants' Savings, the Probability of Return Migration and Migrants' Performance," Working Papers 1989-19, Brown University, Department of Economics.
- Alice Mesnard, 2004. "Temporary migration and capital market imperfections," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 242-262, April.
When requesting a correction, please mention this item's handle: RePEc:mie:wpaper:513. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (FSPP Webmaster)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.