Strategic Human Capital Investment in Second-Generation Children and Return Migration

Abstract

In this paper, we argue that return migration needs to be analyzed by taking the interdependent location choice of the parent and the child into account. We formulate a model featuring a one-person household with his offspring, where parent decides the human capital investment of the child and the child determines the migration strategy and the frequency of attention to provide to his parent. We introduce the asymmetric assimilation of the generations such that child receives a preference shock in favor of the host country. Empirically testable predictions are derived from the model. Parents with weak preferences over home country intend to stay and invest more in their children's human capital. Decreasing human capital investment leads to an increase in the probability of return for both the child and the parent. A higher cost of attention in case of separation decreases the probability of family members to be separated. The predictions of the model are tested using father-child pairs in the German Socio-Economic Panel. The estimates suggest that fathers who intend to return send their children to low-track secondary schools. This effect is even more prominent for daughters. There is a negative impact of upper secondary school track enrollment on the return migration when the child becomes an adult. Child's preference over host country has a negative impact on return migration of both. Long distance to the country of origin and poor health status of the father are associated with a lower probability of father-child pair being separated.