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Migration and Dynamics: How a Leakage of Human Capital Lubricates the Engine of Economic Growth

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  • Sorger, Gerhard
  • Stark, Oded
  • Wang, Yong

Abstract

This paper studies the growth dynamics of a developing country under migration. Assuming that human capital formation is subject to a strong enough, positive intertemporal externality, the prospect of migration will increase growth in the home country in the long run. If the external effect is less strong, there exists at least a level effect on the stock of human capital in the home country. In either case, the home country experiences a welfare gain, provided that migration is sufficiently restrictive. These results, obtained in a dynamic general equilibrium setting, extend and strengthen the results of Stark and Wang (2002) obtained in the context of a static model.

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Paper provided by University of Bonn, Center for Development Research (ZEF) in its series Discussion Papers with number 155027.

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Date of creation: Jul 2013
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Handle: RePEc:ags:ubzefd:155027

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Keywords: Overlapping-generations growth model; Intertemporal human capital externalities; Long-run growth effect of the prospect of migration; Social welfare gains; Community/Rural/Urban Development; Institutional and Behavioral Economics; Labor and Human Capital; F22; I30; J24; J61; O15; O40;

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  1. Mountford, Andrew, 1997. "Can a brain drain be good for growth in the source economy?," Journal of Development Economics, Elsevier, vol. 53(2), pages 287-303, August.
  2. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  3. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  4. Gerhard Glomm & B. Ravikumar, 2001. "Human capital accumulation and endogenous public expenditures," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 807-826, August.
  5. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
  6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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