The brain drain, 'educated unemployment', human capital formation, and economic betterment
AbstractExtending both the 'harmful brain drain' literature and the 'beneficial brain gain' literature, this paper analyzes both the negative and the positive impact of migration by skilled individuals in a unified framework. The paper extends the received literature on the 'harmful brain drain' by showing that in the short run, international migration can result in 'educated unemployment' and overeducation in developing countries, as well as a brain drain from these countries. A simulation suggests that the costs of 'educated unemployment' and overeducation can amount to significant losses for the individuals concerned, who may constitute a substantial proportion of the educated individuals. Adopting a dynamic framework, it is then shown that due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation in migration policy in both the current period and the preceding period can facilitate 'take-off' of a developing country in the current period. Thus, it is suggested that while the migration of some educated individuals may reduce the social welfare of those who stay behind in the short run, it improves it in the long run. Copyright (c) 2007 The Authors Journal compilation (c) 2007 The European Bank for Reconstruction and Development .
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Bibliographic InfoArticle provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.
Volume (Year): 15 (2007)
Issue (Month): (October)
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Postal: One Exchange Square, London EC2A 2JN
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0967-0750
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Other versions of this item:
- Stark, Oded & Fan, C. Simon, 2007. "The Brain Drain, "Educated Unemployment," Human Capital Formation, and Economic Betterment," Discussion Papers 7122, University of Bonn, Center for Development Research (ZEF).
- Oded Stark & C. Simon Fan, 2007. "The Brain Drain, “Educated Unemployment,” Human Capital Formation, and Economic Betterment," CEDI Discussion Paper Series 07-01, Centre for Economic Development and Institutions(CEDI), Brunel University.
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