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Dissertation Committee:
Byeongju Jeong (chair)
Randall K. Filer
Michal Kejak
Evangelia Vourvachaki

Abstract:

The dissertation addresses different aspects of return migration of labor, which represents a challenging field for investigation due to the data limitations and methodological issues.

The dissertation consists of three chapters. First chapter, written in co-authorship with Byeongju Jeong, models selection of migrants with respect to educational attainment. We attempt to explain relatively low return rates among migrants with only secondary education compared to return rates of low- and highly educated migrants observed in the data. We develop a two-country, two-period overlapping generations (OLG) model with emigration and return migration undertaken by agents heterogeneous in terms of education. Our model is built on the decision mechanism proposed by Borjas & Bratsberg (1996), which we augment by assimilation costs and immigration policy restrictions. The U-shape pattern of return rates with respect to education is driven by a combination of two forces: sizable wage differentials between the foreign and home countries, which decline with education, and uncertain opportunities for status adjustment to permanent residence. Our model predicts that migrants with secondary education have both incentives and opportunities to remain permanently in the foreign country.

In second chapter, using the example of Vietnam, we estimate returns to temporary migration experience. We are testing the hypothesis of the human capital accumulation in the process of on-the-job training, which migrants undergo during their temporary stay abroad. In the case of Vietnam, we find a positive wage differential (experience premium) of 28 % on average, and reveal substantial variation of this premium across genders and educational attainments. In particular, the largest premium was estimated for the highly educated returnees and in the case of females. For males, we find a U-shape patter of the experience premium variation with respect to education.

Third chapter of the dissertation reveals an expansionary effect of temporary migration of labor on the economies of origin countries. We construct a tractable two-county, two-period OLG model with migration and return decisions of agents heterogeneous in terms of skills. The model is based on the assumption that the human capital is upgraded in immigration in both skill groups. We show that when returns to skills in the origin country are higher than in destination, emigration of skilled labor will be insufficient to close the technological gap with the foreign country. Next, we consider a possibility for the government intervention in the form of subsidizing return migration of a particular skill type. Our model predicts that when skilled labor is sufficiently scarce or has a sufficiently large output share, the entire subsidy should be channeled to the skilled.

Full Text: “Essays on Return Migration and Economic Growth” by Renata Ivanova