Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185139 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11679
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
How does saving behavior of immigrants respond to changes in purchasing power parity between the source and host countries? We examine this question by building a theoretical model of joint return-migration and saving decisions of temporary migrants and then test its implications by using data from the German Socioeconomic Panel on immigrants from 92 source countries. As implied by our theoretical model, we find that the saving rate increases in the nominal exchange rate but decreases in the source-country price level and that the absolute magnitude of both relationships increases as the time to retirement becomes shorter. At the median level of years to retirement, the absolute values of the elasticity of savings with respect to the nominal exchange rate and with respect to the source-country price level are both close to unity. Moreover, as we gradually restrict the sample to individuals with stronger return intentions, the estimated magnitudes become larger and their statistical significance higher.
Subjects: 
migrants' savings
return migration
exchange rates
prices
PPP
JEL: 
F22
J61
Document Type: 
Working Paper

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