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Human capital acquisition and international migration in a model of educational market

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  • Zakharenko, Roman

Abstract

This paper analyzes international high-skilled migration caused by financial frictions in educational market. I develop a model of learning in which acquisition of skill is only possible through personal interaction with a skilled individual; the income of the skilled is sensitive to financial constraints for the unskilled. Cross-country differences in such constraints have a multiplicative effect on the skill premium, causing outmigration of skilled individuals from a less developed country. I study welfare implications of such brain drain for the sending and receiving countries. Although it makes more difficult skill acquisition in the sending country, the unskilled may still be better off: increased cost of skill acquisition is offset by higher income once the skill has been acquired. For the receiving country, I identify a phenomenon of immiserizing immigration: a depletion of the stock of skill in the sending country due to brain drain hinders further production of skill, which may hurt the receiving country. Additionally, I find that increased openness of the sending country to migration and the resultant accelerated brain drain increase the incentives of the country government to reduce financial frictions.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 42 (2012)
Issue (Month): 5 ()
Pages: 808-816

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Handle: RePEc:eee:regeco:v:42:y:2012:i:5:p:808-816

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Related research

Keywords: Skill acquisition; Brain drain; Immiserizing immigration; Financial constraints;

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References

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  1. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
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Cited by:
  1. Herbst, Mikolaj & Rok, Jakub, 2013. "Mobility of human capital and its effect on regional economic development. Review of theory and empirical literature," MPRA Paper 45755, University Library of Munich, Germany.
  2. Li, Guo & Mroz, Thomas A., 2013. "Expected income and labor market choices of US married couples: A locally weighted regression approach," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(6), pages 985-995.

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