Overshooting the Savings Target: Temporary Migration, Investment in Housing and Development

SummaryThere are two seemingly competing branches of the literature on saving and duration-of-stay decisions of temporary migrants. One relies on the target-saving explanation and the other on utility maximization over a life cycle. We attempt to reconcile the two approaches within a framework where a migrant has a well-defined savings target (in planning to purchase a new home at origin) but also chooses the time of return and the consumption path to maximize lifetime utility. Our analysis highlights the role of property investment and savings repatriation in the relationship between temporary migration and development.