Home Sweet Home?

Abstract

This paper examines whether the subjective well-being of migrants is responsive to fluctuations in macroeconomic conditions in their country of origin. Using the German Socio-Economic Panel for the years 1984 to 2009 and macroeconomic variables for 24 countries of origin, we exploit country-year variation for identification of the effect and panel data to control for migrants’ observed and unobserved characteristics. We find strong evidence that migrants’ well-being responds negatively to an increase in the GDP of their home country. That is, migrants seem to regard home countries as natural comparators, which grounds the idea of relative deprivation underlying the decision to migrate. The effect declines with years-since-migration and with the degree of assimilation in Germany.