# **1 Introduction**

Temporary migration is widespread across the globe, especially for low-skilled migrants from low- and middle-income countries (Dustmann and G ̈orlach 2016). The empirical and policy literature has traditionally focused on permanent migration and its impact on high-income destination countries, mainly due to the availability of the relevant and suitable data. In the last decade, however, research on temporary migration and its impact on mostly low- and middle-income origin countries has grown considerably as the issue received more attention from policy makers and new data sources became available (Wahba 2014).<sup>1</sup> The focus of the earlier papers on temporary migration was on the effects of remittances on income and poverty in origin countries.<sup>2</sup> More recent literature shifted the focus to other macroeconomic variables, and especially, those associated with economic development (Clemens, Ozden, and Rapoport<sup> ̈</sup> 2014). The objective of this paper is to summarize and discuss the evidence on the various channels through which temporary migration and economic development in origin countries are linked, identify the data and methodology challenges, and finally suggest new venues of research.

One of the main observations of this literature is that temporary migration is part of a complex dynamic optimization process of individuals who aim to maximize their lifetime utility (Borjas and Bratsberg 1994; Kırdar 2009; Dustmann and G ̈orlach 2016). These individual decisions, when aggregated across the population, impact a range of macroeconomic variables and the overall development paths of origin countries. In terms of individual decisions, temporary migrants have to decide when to leave, where to move, how long to stay, what kind of work to do, what to do after return, and whether to migrate again. They have to overcome legal barriers and pay upfront fixed costs, often financed through borrowing. They face numerous sources of uncertainty due to macroeconomic conditions that affect labor demand at the destination or individual conditions that impact their employers.

These decisions are also interconnected: the outcome of each decision depends on and influences the other decisions. In other words, the temporary migration process has dynamic repercussions on the migrants’ human capital, savings, labor supply, occupational choices, and, ultimately, their consumption paths and lifetime welfare (Dustmann and Kirchkamp

> 1Identifying the impacts of temporary migration on origin countries requires following the employment trajectories of workers across borders over time and collecting detailed household, consumption, savings and investment data, which are hard to achieve with standard cross-sectional (household or labor force) surveys or administrative registration data.

> 2While several papers look at the aggregate association between remittances and economic growth in origin countries, results are mixed or inconclusive, and suffer from a number of methodological limitations (Clemens and McKenzie 2018). Also see Cazachevici, Havranek, and Horvath (2020) for a recent meta-nalysis and review of the literature on the topic.

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