A brain gain with a brain drain

"We study human capital depletion and formation in an economy open to out-migration, as opposed to an economy which is closed. Under the assumption of asymmetric information, the enlarged opportunities and the associated different structure of incentives can give rise to a brain gain in conjunction with a brain drain. Migration by high-skill members of its workforce notwithstanding, the home country can end up with a higher average level of human capital per worker."     

Welfare-theoretical analyses of the brain drain

The paper reviews and synthesises the theoretical analyses of the brain drain in the earlier literature and in the present symposium in the Journal on the subject. Static analysis and dynamic analysis are distinguished, critical issues are raised relating to how welfare changes should be discussed in the context of migration, and possibilities of fruitful future research are outlined.     

Asymmetric information and multi-stage brain drain

In this paper, multi-stage decision procedures associated with the occurence of the brain drain are considered within an asymmetric information framework. Qualitative properties of multi-stage brain drain processes are characterized. Given additional assumptions, some policy implications are also provided through comparative statics analysis.     

The "brain drain" and social consciousness

The brain drain being experienced by the former USSR following the liberalization of international relations and emigration laws is described. The authors note that total emigration has increased to about 500,000 per year and that a further 7 million persons, many of whom are highly qualified, are expected to emigrate over the next decade. The possibilities of developing conditions in the former USSR that will decrease this loss are explored.     

The brain drain and the world distribution of income

Skilled emigration (or brain drain) from developing to developed countries is becoming the dominant pattern of international migration today. Such migration is likely to affect the world distribution of income both directly, through the mobility of people, and indirectly, as the prospect of migration affects the rate of return to education in both the sending and receiving economies. This migration pattern will therefore affect human capital accumulation and fertility decisions in both the sending and receiving economies. This paper analyzes these effects in a dynamic two country model of the world economy where agents in both countries make optimal fertility and human capital decisions. The implications of the analysis for the world distribution of income are derived in the light of recent empirical findings of the brain drain literature. The analysis shows that the current trend towards predominantly skilled emigration from poor to rich countries may in the long run increase inequality in the world distribution of income as relatively poor countries grow large in terms of population. In the short run however, it is possible for world inequality to fall due to rises in GDP per capita in large developing economies with sufficiently low skilled emigration rates.     

Domestic distortions,imperfect information and the brain drain

An earlier paper by Bhagwati and Hamada (1974) presented a theoretical analysis of the brain drain in the context of wage rigidity and unemployment. This paper extends the analysis by modifying the model to incorporate the phenomena of overqualification, internal diffusion of labor from urban to rural areas and imperfect information about the quality of labor. The welfare effect of the brain drain in the presence of these phenomena is analyzed.     

Estimating some key parameters in the brain drain taxation model

This paper attempts an estimate of the supply function of qualified emigrants from 23 countries into the U.S. by comparing the wages of professionals in the country of destination to those in the country of origin. The results have shown that the relative wage is a strong explanatory variable, the implied supply elasticity being of the order of 0.4. Among the other variables tried, distance was found to be unimportant, while relative per capita income had one half the explanatory power of relative wages. It was also found that a surtax of the Bhagwati type would have a negligible deterrent effect on the number of emigrants, therefore providing a pure revenue source to LDCs.     

Return migration, human capital accumulation and the brain drain

In this paper we present a model that explains migrations as decisions that respond to where human capital can be acquired more efficiently, and where the return to human capital is highest. The basic framework is a dynamic Roy model in which a worker possesses two distinct skills that can be augmented by learning by doing. There are different implicit prices, in different countries and different rates of skill accumulation. Our analysis contributes to the literature on the selection of immigrants and return migrants by offering a richer framework that may help to accommodate selection of emigrants and return migrants that are not immediately compatible with the one-dimensional skill model. Our analysis also has implications for the debate on brain drain and brain gain. In the two skills model presented here, return migration can lead to a mitigation of the brain drain, or even the creation of a “brain gain”, where those who return bring the home country augmented local skills.     

Emigration,wage differentials and brain drain: the case of Suriname

In this article, we examine two hypotheses concerning emigration. The first hypothesis is that emigration is positively correlated with wage differentials. The second hypothesis concerns a positive correlation between emigration and higher education in the sending country (the so-called brain gain hypothesis). We analyse unique time-series data for Suriname for the period 1972–2009, for which we fit error correction models to disentangle short-run from long-run effects. We document moderate support for the first hypothesis, but we find strong support for the brain drain (and not brain gain) hypothesis. We conclude with implications of our findings for Suriname.     

The propensity to return: Theory and evidence for the Italian brain drain

Return migration is the positive counterpart of the brain drain. The effects of the brain drain in Italy could be negative: this paper shows that highly skilled migrants decide not to return to their native country.     

Efficiency,equality, income taxation and the brain drain: A second-best argument

This note conducts a second-best examination of the effect of the brain drain. If the size distribution of income is a welfare objective, lump-sum taxation is unavailable, and an Atkinson-type optimal income tax is used, it is shown that the opportunity to emigrate will create special difficulties for the LDC policy-maker.     

Consequences of a tax on the brain drain for unemployment and income inequality in less developed countries

Welfare implications of an income tax paid by emigrant skilled workers are analyzed in a model which assumes international capital mobility and allows for unemployed labor in the modern sector of a developing country. The tax discourages overinvestment in education and also contributes to the welfare of those remaining through the direct revenue effect. However, expected earnings of unskilled workers decline as a result of the tax, while those of non-migrant skilled workers rise. The tax may thus exacerbate domestic income inequality. In addition, modern sector employment, output, and capital stock may fall.     

The theoretical and empirical evaluation of the third world brain drain to the United States: 1972-1987

"This paper is divided into four sections. Section I deals with theoretical issues behind labor migration in general with emphasis on 'brain drain'. Section II is concerned with an empirical analysis of third world professional immigration into the U.S. for the time period 1972-1987. Section III discusses policy implications to deal with [the] 'brain drain' problem."     

Brain drain and factor complementarity

In this paper we develop an extended Solow growth model with emigration which aggregates different types of labor skills from strict complementarity to perfect substitution. The derivation of balanced growth paths shows that the most relevant cases for studying the impact of emigration are those where these paths can only be attained asymptotically. This requires and justifies the need for using transitional dynamics. We therefore derive a complete characterization of the transitional dynamics of output and wages in the sending country for all possible values taken by the elasticity of substitution between skilled and unskilled workers. The model then serves to qualitatively study the effect of brain drain on per capita income and wages of the sending country.     

Brain drain and income distribution

In a context in which increased income inequality has raised much concern, and skilled workers move easily across countries, an important question arises: how does the brain drain affect income distribution in the source economy? We address this question and introduce two contributions to the literature on brain drain. First, we present and solve a simple stylized model to study whether and, if so, how the brain drain affects the distribution of income, in a context in which higher education is publicly financed with general taxes. Second, we explore empirically the effect of an increase in skilled emigration on income distribution. A key prediction of our theoretical model is the existence of a non-monotonic relationship between income inequality and emigration of skilled workers. Our empirical data confirm this result, showing a statistically significant inverse U-shaped form.