IZA DP No. 5722: The Impact of Labour Market Dynamics on the Return-Migration of Immigrants
revised version published in: Review of Economics & Statistics, 2014, 96(3), 483-494
Using administrative panel data on the entire population of new labour immigrants to The Netherlands, we estimate the causal effects of labour dynamics on their return decisions. Specifically, the roles of unemployment and re-employment spells on immigration durations are examined. The endogeneity of labour market outcomes and the return migration decision, if ignored, confounds the causal effect. This empirical challenge is addressed using the "timing-of-events" method. We estimate the model separately for distinct immigrant groups, and find that, overall, unemployment spells shorten immigration durations, while re-employment spells delay returns for all but one group. The magnitude of the causal effect differs across groups.