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Is migration a good substitute for education subsidies?

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Author Info
Docquier, Frédéric
Faye, Ousmane
Pestieau, Pierre

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Abstract

Assuming a given educational policy, the recent brain drain literature reveals that skilled migration can boost the average level of schooling in developing countries. In this paper, we introduce educational subsidies determined by governments concerned by the number of skilled workers remaining in the country. Our theoretical analysis shows that developing countries can benefit from skilled emigration when educational subsidies entail high fiscal distortions. However when taxes are not too distortionary, it is desirable to impede emigration and subsidize education. We then investigate the empirical relationship between educational subsidies and migration prospects, obtaining a negative relationship for 105 countries. Based on this result, we revisit the country specific effects of skilled migration upon human capital. We show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses.

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File URL: http://www.sciencedirect.com/science/article/B6VBV-4RHWP0M-2/1/f8ea4a5c0e0d910710657838d6d05988
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Publisher Info
Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 86 (2008)
Issue (Month): 2 (June)
Pages: 263-276
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Handle: RePEc:eee:deveco:v:86:y:2008:i:2:p:263-276

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  1. Nils-Petter Lagerloef, 2000. "From Malthus to Modern Growth: The Three Regimes Revisited," Econometric Society World Congress 2000 Contributed Papers 1248, Econometric Society. [Downloadable!]
  2. Catia Batista & Aitor Lacuesta & Pedro C. Vicente, 2007. "Brain Drain or Brain Gain? Micro Evidence from an African Success Story," Economics Series Working Papers 343, University of Oxford, Department of Economics. [Downloadable!]
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  3. Oded Galor & David N. Weil, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May. [Downloadable!] (restricted)
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  4. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Michel Beinea & Frédéric Docquier & Hillel Rapoport, 2006. "Measuring International Skilled Migration: New Estimates Controlling for Age of Entry," CReAM Discussion Paper Series 0613, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London. [Downloadable!]
  6. Gary S. Becker & Edward L. Glaeser & Kevin M. Murphy, 1999. "Population and Economic Growth," American Economic Review, American Economic Association, vol. 89(2), pages 145-149, May. [Downloadable!] (restricted)
  7. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October. [Downloadable!] (restricted)
  8. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February. [Downloadable!] (restricted)
  9. Michel Beine & Fréderic Docquier & Hillel Rapoport, 2008. "Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers," Economic Journal, Royal Economic Society, vol. 118(528), pages 631-652, 04. [Downloadable!] (restricted)
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  10. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
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  11. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
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