Source country characteristics and immigrants’ optimal migration duration decision

This paper examines how immigrants’ optimal migration duration in the host country responds to the purchasing power parity (ppp) and relative wages between the host and source countries. A theoretical model of joint migration duration and saving decisions reveals that the optimal migration duration decreases in ppp unless the elasticity of intertemporal substitution of consumption is well above typical estimated values for this parameter. In fact, empirical results from immigrants in Germany reveal that optimal migration duration decreases in ppp. The empirical findings also imply that—holding individual immigrant characteristics constant— immigrants from poorer source countries have shorter predicted migration duration than immigrants from wealthier source countries. In addition, this paper shows that longitudinal data on intentions can be informative by examining how observed event realizations lead to revisions to intentions.