The Selection of Return Migrants: Some Evidence and a Model-based Analysis

Abstract

The relation between a migrant’s productivity and his or her chosen migration duration is a priori unknown and potentially non-monotonic. We document a U-shaped relation between the intention of recent documented Mexican immigrants to stay permanently in the U.S. and their earnings. We estimate a simple dynamic life-cycle model that replicates this pattern. We carefully explain how the observed pattern of return intentions is used to identify the model’s preference parameters. We use the estimated model to evaluate the effect of a change in the earnings level in Mexico, as well as of the purchasing power parity between the U.S. and Mexico on immigrants’ return plans and their savings.