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


  • Abarcar, Paolo


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.

Suggested Citation

  • Abarcar, Paolo, 2013. "The Return Motivations of Legal Permanent Migrants: Evidence from Exchange Rate Shocks and Immigrants in Australia," MPRA Paper 47832, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:47832

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    References listed on IDEAS

    1. Makin, Tony, 1999. "The Asian Currency Crisis and the Australian Economy," Economic Analysis and Policy, Elsevier, vol. 29(1), pages 77-85, March.
    2. 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.
    3. Dustmann, Christian, 2003. "Return migration, wage differentials, and the optimal migration duration," European Economic Review, Elsevier, vol. 47(2), pages 353-369, April.
    4. Kirdar, Murat, 2009. "Source Country Characteristics and Immigrants’ Migration Duration and Saving Decisions," MPRA Paper 13322, University Library of Munich, Germany.
    5. Gibson, John & McKenzie, David, 2011. "The microeconomic determinants of emigration and return migration of the best and brightest: Evidence from the Pacific," Journal of Development Economics, Elsevier, vol. 95(1), pages 18-29, May.
    6. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    7. Arash Nekoei, 2013. "Immigrants' Labor Supply and Exchange Rate Volatility," American Economic Journal: Applied Economics, American Economic Association, vol. 5(4), pages 144-164, October.
    8. Alice Mesnard, 2004. "Temporary migration and capital market imperfections," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 242-262, April.
    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;Population Association of America (PAA), vol. 19(3), pages 279-290, August.
    10. Gunawardana, Pemasiri, 2005. "The Asian Currency Crisis and Australian Exports to East Asia," Economic Analysis and Policy, Elsevier, vol. 35(1-2), pages 73-90, March/Sep.
    11. Christian Dustmann & Yoram Weiss, 2007. "Return Migration: Theory and Empirical Evidence," CReAM Discussion Paper Series 0702, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    12. 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, June.
    13. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc.
    14. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
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    Cited by:

    1. Ha Trong Nguyen & Alan Duncan, 2015. "Macroeconomic Fluctuations in Home Countries and Immigrants’ Wellbeing: New Evidence from Down Under," Bankwest Curtin Economics Centre Working Paper series WP1502, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.
    2. Nguyen, Ha Trong & Duncan, Alan S, 2017. "Exchange rate fluctuations and immigrants' labour market outcomes: New evidence from Australian household panel data," Journal of International Economics, Elsevier, vol. 105(C), pages 174-186.
    3. Parag Mahajan & Dean Yang, 2017. "Taken by Storm: Hurricanes, Migrant Networks, and U.S. Immigration," Working Papers 17-50, Center for Economic Studies, U.S. Census Bureau.
    4. Parag Mahajan & Dean Yang, 2017. "Taken by Storm: Hurricanes, Migrant Networks, and U.S. Immigration," NBER Working Papers 23756, National Bureau of Economic Research, Inc.

    More about this item


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

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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