Purchasing-Power-Parity and the Saving Behavior of Temporary Migrants
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.
Other description
JEL: F22,J61
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Date
2018-08Author
Akay, Alpaslan
Brausmann, Alexandra
Djajic, Slobodan
Kirdar, Murat G.
Keywords
Migrants' Savings
Return Migration
Exchange Rates
Prices
PPP
Publication type
report
ISSN
1403-2465
Series/Report no.
Working Papers in Economics
735
Language
eng