Temporary migration entails benefits, but also costs, for sending and receiving countries

Abstract

Migrants who plan to return to their home countries save more, send higher remittances, and accept lower-paid job offers. They also have a lower incentive to integrate and invest in host country specific skills, which hinders their careers. These micro-level choices have macroeconomic implications in both sending and receiving countries, from remittances and entrepreneurial investments in migrants’ home countries to fiscal contributions in immigration countries. Receiving countries face a trade-off: while return migration before retirement limits the cost to public benefit systems, prospects to settle permanently improve careers and integration, thereby increasing tax revenue, and strengthening social cohesion.