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Remittances, savings and return migration under uncertainty

Year: 2014

Type: article

Abstract: Recent empirical evidence links migrant remittances, savings and return migration, and stresses the inaccuracy of return migration plans. This paper presents a model of endogenous remittances, savings and return decisions under uncertainty. In our framework, migrants make remittance and saving decisions at an early stage of migration, when their long term economic performance in the host country is still uncertain. Over time, information about professional prospects is acquired, and conditionally on past decisions, migrants adjust their return plans. We show that when migrants expect large gains from migration and face relatively low wage risks in the host country, they tend to remit less, save more and are less likely to return migrate. These results are in line with recent empirical evidence and provide a rationale for the support by relatives in the sending country of low-skill, illegal migration. JEL codesD13; D80; JE

Source: IZA Journal of Migration

DOI: 10.1186/s40176-014-0022-7

Authors: Matthieu Delpierre, Bertrand Verheyden

Institution: CEPS/INSTEAD

Language: English

Topic: Migration and Labor Dynamics

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $1,202