Return Intentions of Migrants: Theory and Evidence

This paper analyses the return intentions of migrant workers. An intertemporal model is developed where the point of return to the home country is endogenous. The analysis emphasizes three explanations of why it should be optimal to migrate only temporarily: differences in relative prices in the host and home country, the possibility of accumulating human capital abroad, which is only earnings effective back home, and complementarities between consumption and the environment where consumption takes place. Some hypotheses implied by the theory are empirically tested, using micro data on migrant workers in Germany. The results of the econometric analysis are largely consistent with the implications of the theory.