Abstract
This paper sets up a choice theoretic, dynamic optimization model in a life cycle setting, within which a temporary international migrant attempts to maximize a lifetime utility function. The choice variables are consumption at each point in time and the period of stay abroad. Determinants of the latter choice are the time stream of benefits and costs associated with migration. Benefits consist primarily of the jump in income levels. Costs comprise, first, of initial job-search and travel costs, second, of higher living costs abroad and, third, of ‘psychic’ costs due to family separation and cultural alienation. The model is applied to a data set of 417 Pakistani workers in Saudi Arabia. The impact of income ‘shocks’ of varying magnitude on planned lengths of stay abroad is simulated. It appears that the decline in wages has to be substantial, over 50 per cent, before, more or less, immediate large-scale return migration can commence to Pakistan.
