How do migrants save? Evidence from the British Household Panel Survey on temporary and permanent migrants versus natives

peer reviewedThis paper investigates the saving behavior of migrants in the UK across different dimensions, i.e., comparing temporary versus permanent migrants and migrants versus natives. Established theoretical predictions show that migrants save more when they plan to stay in the destination only temporarily as target savers. Our empirical evidence takes into account the contemporaneous choice of savings and remittances. Moreover, when comparing the saving profiles of both natives and migrants, we uncover the weight of observable socio‐economic characteristics other than income and wealth. We use the British Household Panel Survey for the period 1991‐2008. The estimation results confirm that temporary migrants have a propensity to save 26 per cent higher than permanent migrants in UK. We also introduce an index of financial capability adjusted for income as an explanatory variable and, when employing the Blinder‐Oaxaca decomposition for the Tobit model of saving choice, migrants are more affected by observable social‐economic characteristics than natives