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Repeated Circular Migration : Theory and Evidence

This paper contributes to the literature on temporary migration by developing and solving a model of repeated circular migration that accounts for saving behavior. Using Mexican Migrant Project data on undocumented migrants and non-migrants, I estimate the parameters of the model through the Method of Simulated Moments. The cost of migration and an individual’s preference for residence in Mexico are found to vary with education. These results help explain heterogeneity in the patterns of migration observed across individuals of different education levels. The model and parameter estimates also allow for the analysis of migration policy. The intensity of U.S. border enforcement is found to have a significant positive effect on the cost of migration. The parameter estimates may also be used to analyze the incentives for workers to participate in some recently proposed guestworker programs. JEL CLASSIFICATION: J61, F22, O15, R23