Why Do Migrants Return to Poor Countries? Evidence from Philippine Migrants%U2019 Responses to Exchange Rate Shocks
56 Pages Posted: 3 Aug 2006 Last revised: 20 Oct 2006
Date Written: July 2006
This paper distinguishes between target-earnings and life-cycle motivations for return migration by examining how Philippine migrants%u2019 return decisions respond to major, unexpected exchange rate changes in their overseas locations (due to the Asian financial crisis). Overall, the evidence favors the life-cycle explanation: more favorable exchange rate shocks lead to fewer migrant returns. A 10% improvement in the exchange rate reduces the 12-month return rate by 1.4 percentage points. However, some migrants appear motivated by target-earnings considerations: in households with intermediate foreign earnings, favorable exchange rate shocks have the least effect on return migration, but lead to increases in household investment.
Suggested Citation: Suggested Citation