published in: European Economic Review, 2007, 51 (3), 553-576
This paper estimates a structural dynamic life-cycle model of outmigration where, in each
period, immigrants choose whether to work in the host country, not to work but remain in the
host country, or outmigrate. The model incorporates several features of existing life-cycle
theories of outmigration but distinguishes itself by introducing uncertainty in about future
earnings and preferences which allows immigrants to revise their duration decisions
throughout their migration experience. We overcome the problem of not directly observing
outmigration movements by using panel attrition as a proxy variable and use a simple
method to correct for the fact that part of the attrition is not a consequence of outmigration.
Estimates are used to predict changes in life-cycle patterns of outmigration behavior.
Estimation results indicate that outmigration does not depend exclusively on earnings
differentials. Estimated assimilation rates are found to be robust to selection effects.
Immigrants are found to be forward looking decision makers, and simulations show that
predicted migration durations are very sensitive to changes in their economic environment
and differ considerably from those of a myopic model.
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