The Economics of Temporary Migrations

Abstract

Many migrations are temporary -a fact that has often been ignored in the economic literature on migration. Such omission may be serious in that expected migration temporariness can impart a distinct dynamic element to immigrants' economic behavior, generating possible consequences for non-migrants in both home and host countries. In this paper we provide a thorough examination of the various aspects of temporary migrations that matter for the analysis of economic phenomena. We demonstrate the extent of temporary migrations in population movements. We show how temporariness can affect the various economic choices and how better data have improved both the measurement of nonpermanent migrations and the analyses of various aspects of migrant behavior. We propose a general theoretical framework for modeling temporary migration decisions, based on which we outline the various motives for temporariness while simultaneously reviewing related literature and available data sources. We discuss the possible consequences of migration temporariness for non-migrants in both home and host countries.

Estimating immigrant earnings profiles when migrations are temporary

“…If the research design does allow for active human capital investment or labour supply choices, the analysis becomes more complex because the decision of when to out-migrate also affects wage growth. Thus, the problem becomes inherently dynamic and requires a more structural approach to estimation, such as the dynamic framework proposed by Dustmann and Görlach (2016) and applied by Adda, Dustmann and Görlach (2016).…”

“…Although this assumption simplifies analysis considerably by allowing researchers to use off-the-shelf methods to deal with selection and attrition, usually no attempt is made to provide a behavioural model of why some migrants may want to return home and how this choice interacts with other immigrant decisions. In Dustmann and Görlach (2016), this assumption is relaxed. We develop a general dynamic framework for modelling out-migration, and discuss various motives as to why migrants may want to return.…”

“…6 Our argument that a correct estimation of immigrant earnings profiles requires a modelling of migrants' return decisions carries over to more complicated models and to other motives for why individuals may choose to migrate only temporarily (see Dustmann and Görlach, 2016, for an extensive discussion of such cases within a life cycle framework). 7 This group includes articles by Carliner (1980), Long (1980), Borjas (1985), LaLonde and Topel (1992), Pischke (1992), Dustmann (1993), Lindstrom and Massey (1994) The sources of selection bias in the estimation of earnings processes now depend on the timing assumed in the model.…”

“…Adding in individual heterogeneity results in complex relations between decisions that influence the earnings paths and out-migration decision, which in turn affects selection. In such cases, the estimation of immigrant earnings profiles requires a more structural approach that specifies how these choices are determined by the fraction of a lifespan that immigrants expect to spend in the destination country (see Dustmann and Görlach, 2016, for a possible framework). Such an approach should formulate not only the earnings function but also a selection process that specifies how the determinants of time-variant earnings affect location choices (see Adda, Dustmann and Görlach, 2016, for a discussion of how to model earnings profiles when individuals make choices about human capital investment and return migration).…”

Re-Evaluating the Returns to Language Skills Using Latent Trait Estimates

“…Language skills are an important component of immigrants' human capital, correlating with immigrants' wages (McManus et al , 1983;Chiswick, 1991;Borjas, 2014), propensity for return migration (Dustmann & Görlach, 2016), neighborhood sorting (Lazear, 1999), employment status (Dustmann & Fabbri, 2003), occupational choice (Schoellman, 2010), and skill complementarity (Berman et al , 2003). Measuring all of these outcomes is, in turn, vital for understanding the full economic impact of immigration on both immigrants and their host countries.…”