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Oxford Economic Papers 56 (2004), 242-262
© Oxford University Press 2004; All rights reserved

Temporary migration and capital market imperfections

Alice Mesnard

University of Toulouse, Manufacture des Tabacs, 21 allée de Brienne, 31000 Toulouse, France; e-mail: alice.mesnard{at}univ-rse1.fr

This paper analyses the temporary migration decision of workers who are credit constrained. As observed with data on Tunisia, migrants who invest after returning to their country have accumulated more savings and stayed longer abroad than salaried return migrants. To capture these features, we analyse the optimal migration duration and occupational choice of workers using a life-cycle maximisation model. An econometric test enables us to evaluate the extend to which liquidity constraints affect self-employment of returned migrants. The model predicts unexpected effects of policy measures on migration behaviour. In particular, migrants who receive funds to invest after return do not necessarily return earlier.


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