Migration under Asymmetric Information and Human Capital Formation

We study the migration of skilled workers, along with the skill acquisition incentives created by the prospect of migration. We trace out the dynamics of migration as foreign employers accumulate experience in deciphering the skill levels of individual migrants. It is found that migration by the relatively highly skilled is followed by return-migration from both tails of the migrant skill distribution; that the possibility of migration induces skill acquisition at home; that until the probability of discovery reaches its steady state equilibrium, migration consists of a sequence of moves characterized by a rising average skill level; and that migration of skilled workers can entail a home-country welfare gain.