Immigrants entering host countries form some probability of return migration, which in turn affects their economic performance. Recognizing this behavior, Galor and Stark (1990) demonstrate that while the vector of the immigrants’ demographic characteristics is important for measuring their economic performance, researchers have omitted an important variable: the probability of return migration. The authors in a theoretical model showed that the immigrants’ probability of return migration is positively related to immigrants’ savings.
While Galor and Stark (1990) establish a formal theoretical link between the likelihood of return migration and saving behavior, the empirical evidence of this relationship has not been studied in the U.S., in part because of data limitations. There have been no large data sets containing variables on both savings and intentions to emigrate before the New Immigrant Survey (NIS). The NIS is a nationally representative multi-cohort longitudinal study of newly admitted legal immigrants to the U.S. The sample is based on nationally representative samples of the administrative records compiled by the U.S. Immigration and Naturalization Service (INS).
In this article, we use data from the 2003 cohort of the NIS to present empirical evidence on the relationship between the intent to emigrate and saving behavior of immigrants in the U.S. We compare the savings of immigrants with intentions to emigrate to the savings of immigrants without intentions to emigrate. The results from Tobit regressions provide evidence that immigrants with intentions to emigrate have higher level of savings than immigrants without intentions to emigrate. This result implies that immigrants with intentions to emigrate contribute more to capital formation in the host country economies. From a policy perspective, it is beneficial for policy makers to devise measures that encourage immigrants’ plans for emigration.