Migration
Learning and returning

Many recent empirical studies have attributed migrants' relatively high earnings to their strong incentives to invest in human capital specific to host countries' labour markets, of which language proficiency is perhaps the most important. Potential employers use fluency as a screening device and many jobs require an ability to speak and write; it also enhances migrants' ability to communicate their qualifications to potential employers and their access to information about job opportunities and benefit entitlements. In Discussion Paper No. 905, Research Affiliate Christian Dustmann investigates these issues for West Germany using a framework that differentiates between male and female migrants and also controls for the extent of their literacy in their own languages. His results support those of similar studies of male migrants to Australia, Canada, Israel and the US. Years of residence in the host country improve language ability, a higher age at the time of entry reduces the chances of becoming highly proficient, a higher educational level promotes the acquisition of writing skills while speaking fluency is acquired by communication, and the extent of literacy is an important determinant of both speaking and writing abilities. Female migrants' speaking and writing fluency appear to be considerably weaker than those of males, but controlling for their other characteristics causes this differential to disappear. For males, both speaking and writing proficiency have significant positive effects on earnings, but writing fluency is the more important, so studies based on variables representing speaking ability only are likely to produce incorrect conclusions. In particular, for female workers speaking fluency alone is not sufficient to improve their earnings position in the German labour market.

In Discussion Paper No. 906, Dustmann turns to migrants' decision processes concerning return behaviour. The theoretical and empirical literature has paid little attention to the potentially considerable differences in their future planning horizons and their possible influence on current behaviour concerning labour supply, savings and housing choice. Much of the migration observed today is intended to be temporary: its target countries are generally characterized by excess demand in at least some segments of their labour markets which the local work force cannot supply, while sending countries exhibit an excess supply of labour and/or much lower wage rates. If earnings differentials were the sole determinant of migrants' decisions, they would return only when potential earnings at home increased significantly relative to those in the host country, but substantial `return migration' occurs with no such changes.

Dustmann develops an intertemporal model in which the time of return to the home country is endogenous to show that return migration may reflect complementarities between: consumption and the preferred environment in which it takes place, a higher price level in the host country, or the accumulation of human capital abroad that only becomes useful at home. In practice, an intended return will probably be affected by all three simultaneously. Empirical tests of this model on cross-sectional data concerning the intended future durations of stay for male migrant workers in West Germany largely support the implications of this theoretical analysis. The variables capturing the environmental differential and the remaining time in the work force have the expected signs and most are significant, while predicted earnings in the host country are insignificant in all specifications. The nationality, residence and labour force status of the migrant's partner and enrolment of children in German schools affect return intentions as expected. These improved insights into the determinants of return behaviour may prove useful in the development of more sophisticated migration policies that may achieve their goals through incentives rather than restrictions.

Speaking Fluency, Writing Fluency and Earnings of Migrants
Return Intentions of Migrants: Theory and Evidence
Christian Dustmann

Discussion Papers Nos. 905-6, February 1994 (HR)