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The Brain Drain, "Educated Unemployment," Human Capital Formation, and Economic Betterment

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Author Info

  • Stark, Oded
  • Fan, C. Simon

Abstract

Extending 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 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.

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Bibliographic Info

Paper provided by University of Bonn, Center for Development Research (ZEF) in its series Discussion Papers with number 7122.

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Date of creation: 2007
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Handle: RePEc:ags:ubzefd:7122

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Related research

Keywords: Labor and Human Capital;

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References

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  1. Stark, Oded, 2004. "Rethinking the Brain Drain," World Development, Elsevier, vol. 32(1), pages 15-22, January.
  2. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1055-1089, November.
  3. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
  4. Stark, Oded, 2005. "The new economics of the brain drain," MPRA Paper 30939, University Library of Munich, Germany.
  5. Nachum Sicherman, 1987. "Over-Education in the Labor Market," University of Chicago - George G. Stigler Center for Study of Economy and State 48, Chicago - Center for Study of Economy and State.
  6. Michel Beine & Frédéric Docquier & Hillel Rapoport, 2001. "Brain drain and economic growth: theory and evidence," ULB Institutional Repository 2013/10449, ULB -- Universite Libre de Bruxelles.
  7. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  8. Howard Davies, 2005. "Trade in the Chinese 21st Century," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 6(1), pages 1-13, January.
  9. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human Capital Depletion, Human Capital Formation, and Migration. A Blessing in a "Curse"?," Economics Series 55, Institute for Advanced Studies.
  10. Stark, Oded & Fan, C. Simon, 2006. "International Migration and "Educated Unemployment"," Discussion Papers 7126, University of Bonn, Center for Development Research (ZEF).
  11. Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
  12. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
  13. Fan, C. Simon, 2004. "Quality, trade, and growth," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 271-291, October.
  14. Galor, Oded & Tsiddon, Daniel, 1996. "Income Distribution and Growth: The Kuznets Hypothesis Revisited," Economica, London School of Economics and Political Science, vol. 63(250), pages S103-17, Suppl..
  15. Eric A. Hanushek, 1996. "Measuring Investment in Education," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 9-30, Fall.
  16. 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.
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Citations

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Cited by:
  1. Stark, Oded & Casarico, Alessandra & Devillanova, Carlo & Uebelmesser, Silke, 2012. "On the formation of international migration policies when no country has an exclusive policy-setting say," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 420-429.
  2. Byra, Lukasz, 2013. "Rethinking the brain drain: Dynamics and transition," International Review of Economics & Finance, Elsevier, vol. 28(C), pages 19-25.
  3. Katarzyna Budnik, 2011. "Emigration Triggers: International Migration of Polish Workers between 1994 and 2009," National Bank of Poland Working Papers 90, National Bank of Poland, Economic Institute.

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