We estimate the impact of the income earned in the host country on return migration of labor migrants from
developing countries. We use a three-state correlated competing risks model to account for the strong dependence
of labor market status and the income earned. Our analysis is based on administrative panel data of recent
labor immigrants from developing countries to The Netherlands. The empirical results show that intensities of
return migration are U-shaped with respect to migrants' income, implying a higher intensity in low- and highincome
groups. Indeed, the lowest-income group has the highest probability of return. We also find that ignoring
the interdependence of labor market status and the income earned leads to an overestimating the income effect
on departure.