Migrant Wages, Human Capital Accumulation and Return Migration

This paper studies the productivity of migrants, together with the incentives to acquire different stocks of human capital and the propensity to return to their home country. We develop a lifecycle model in which immigrants decide labor market participation, consumption, and investment in human capital together with the optimal length of migration. We estimate this model using panel data that provide repeated information on immigrants’ return intentions and realized return migrations. We show that the relation between return intentions and human capital investment leads to behavior-based selective outmigration, and that policies that influence migrants’ return decisions may lead to suboptimal career profiles, inducing welfare losses for both immigrants and the host country’s population.

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