Migrants in a Guest-Worker System: A Utility-Maximizing Approach
2018
Djajic, Slobodan
This paper examines the behavior of utility-maximizing migrants in a system of guest-worker migration. Their pattern of leisure and commodity consumption at honie and abroad is analysed and related to those chosen by the natives of the host country and the non-migrants of the source country. The paper also highlights an important distinction between permanent and temporary migration. While a permanent migrant is primarily interested in the real-wage differential between countries of immigration and emigration, a guest worker's decision to migrate depends on both the real and the nominal differential. The relative importance of the nominal differential is found to be inversely related to the degree of concavity of his instantaneous utility function.
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