Consumers and the brain drain: Product and process design and the gains from emigration |
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Authors: | Peter Kuhn |
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Institution: | a Department of Economics, University of California, Santa Barbara CA 93106, NBER and IZA, United States b Agricultural and Resource Economics, University of Maryland, 2200 Symons Hall, College Park, MD 20742-5535, United States |
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Abstract: | We consider the welfare effects of skilled worker emigration in a context where skilled labor plays a role in product or process design. We show such emigration can benefit the residents left behind, even when consumers' tastes exhibit a form of home bias. This is because emigration improves the design of goods designed by skilled emigrants but consumed in the sending country. In contrast to existing models of beneficial brain drain, our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration “lottery”. Instead, they are driven purely by differences in market size that induce skilled emigrants to design better products or production processes abroad than at home. |
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Keywords: | F22 J6 O24 O34 |
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