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

See all articles by Dean Yang

Dean Yang

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER); University of Michigan at Ann Arbor - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2006

Abstract

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

Yang, Dean, Why Do Migrants Return to Poor Countries? Evidence from Philippine Migrants%U2019 Responses to Exchange Rate Shocks (July 2006). NBER Working Paper No. w12396. Available at SSRN: https://ssrn.com/abstract=921562

Dean Yang (Contact Author)

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

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National Bureau of Economic Research (NBER)

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University of Michigan at Ann Arbor - Department of Economics

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