Discussion Paper Series CDP No 02/07 Return Migration: Theory and Empirical Evidence

In this paper we discuss forms of migration that are non-permanent. We focus on temporary migrations where the decision to return is taken by the immigrant. These migrations are likely to be frequent, and we provide some evidence for the UK. We then develop a simple model which rationalizes the decision of a migrant to return to his home country, despite a persistently higher wage in the host country. We consider three motives for a temporary migration: Differences in relative prices in host- and home country, complementarities between consumption and the location where consumption takes place, and the possibility of accumulating human capital abroad which enhances the immigrant's earnings potential back home. For the last return motive, we discuss extensions which allow for immigrant heterogeneity, and develop implications for selective in- and out- migration