RETURN MIGRATION AS AN INDIVIDUAL'S OPTIMAL UTILITY MAXIMIZING BEHAVIOR

Abstract: This paper presents a model of location decisions of a multi-period, finite-life, utility maximizing individual and an empirical hazard rate analysis of return migration for Puerto Rican born males who worked in the United States during the 1980s. A potential migrant is assumed to consume leisure, purchased goods, and local amenities and to be retired in his final period of life. We show that it is optimal for him to migrate in the first period or to never migrate. Given that migration occurs, return migration is likely when he retires from the labor market. The reason is local amenities, including nearness to family, friendly culture, pleasant climate, and familiar places, which are complementary with leisure, weigh heavily in consumption decisions at this time. In the hazard rate analysis, we find that factors affecting wage differentials between the United States and Puerto Rico play a role, but the strongly convex effect of an individual's age on his hazard rate for return migration supports the hypothesis of returning home in retirement to consumer home-country amenities. However, the hazard of return migration is concave duration dependent.


Issue Date:
2000
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/18242
Total Pages:
51
Series Statement:
Staff Paper 339




 Record created 2017-04-01, last modified 2017-08-24

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