Remittances and the Brain Drain: Skilled Migrants Do Remit Less

It has been argued that the adverse impact of skilled versus unskilled labor migration can be mitigated or even offset by the fact that skilled migrants remit more than unskilled ones. This paper contributes to the much debated and so far unresolved related issue, namely whether remittances actually increase with migrants' level of education. The determinants of remittances considered include migration levels and rates, migrants' education level, and source countries' income, financial sector development and expected growth rate. The estimation accounts for potential endogeneity, an issue not considered in the few existing studies on this topic. Our main finding is that remittances decrease with the share of migrants with tertiary education. This provides an additional reason for which source countries would prefer unskilled to skilled labor migration. Moreover, as predicted by our model, remittances increase with source countries' level and rate of migration, financial sector development and population, and decrease with their per capita income and expected growth rate.