Capital accumulation through studying abroad and return migration |
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Affiliation: | 1. School of Economics, Nankai University, Tianjin 300071, China;2. Research Institute for Economics & Business, Kobe University, Kobe 657-8501, Japan |
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Abstract: | This paper examines the interplays among studying abroad, return migration and capital accumulation, in a dynamic general equilibrium model featuring heterogeneous ability. Households invest in education and make two migration decisions: whether to study abroad and subsequently whether to return home. The model predicts that the highest, middle and lowest-ability people choose respectively permanent migration, return migration and no migration. More interestingly, we find a novel migration cycle: returnees bring back learned-knowledge and over time, capital accumulates, attracting more return migration. Further, the usual “brain drain” in the literature can be turned into “brain gain”, by providing a subsidy to studying abroad and returning home. |
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Keywords: | Capital accumulation Studying abroad Return migration Heterogeneous ability Brain gain F22 I25 O15 |
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