Migrant Wages, Human Capital Accumulation and Return Migration

This paper analyses the wage dynamics of migrants focussing on their human capital accumulation and how it is affected by potential return migration. We develop a life-cycle model describing labor market participation, wages, return decisions as well as two forms of human capital, work experience and cultural integration. The model is estimated using panel data and exploits elicited return intentions as well as realised ones. We show that return intentions are key to understand the decision to invest in various forms of human capital and to explain differential wage paths. We show that conventional estimation methods overstate returns to work experience, as they fail to take into account selective return migration but also selective investment in human capital.