On the Optimal Duration of Migration

Abstract

The notion that labour migration will take place in the presence of a wage differential and that in the absence of a wage differential migration will not take place lies at the heart of research on labour migration. However, this notion does not capture the soul of labour migration. There is a strong implicit assumption that the wage differential is exogenous to the individual migrant. Yet migration, as a form of investment in human capital, can change the differential substantially. Furthermore, other variables also impinge on labour migration, indeed migration can well take place in the absence of a wage differential. Return migration is subject to similar considerations. When some of the returns to migration are realized upon return migration, return may take place in spite of the wage differential between abroad and home being positive. An example of this is a higher purchasing power of savings accruing from work abroad at home than abroad. Since consumption requires time, it is not possible to leave abroad for home an instant prior to the termination of life in order to enjoy a very large consumption in a very short time spell. Hence the optimal duration of stay abroad can be shown to be shorter than the duration of working life (Stark, Helmenstein and Yegorov, 1997).