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Macroeconomic Instability, Migration, and the Option Value of Education

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Author Info

  • Eliakim Katz

    (Department of Economics, Northern Illinois University)

  • Hillel Rapoport

    ()
    (Bar Ilan University,and CREDPR,Department of Economics,Stanford University)

Abstract

We explore the relation between variability in the rate of return to human capital and investment in education in the context of migration. Specifically, we show that if migration is a possibility, such variability in the rate of return to human capital can induce residents of developing countries to make greater investments in education. Moreover, providing that education is relatively costly, variability in the return to human capital may increase the average level of education in a developing economy even after expected migration is netted out. Finally, our findings are shown to have explanatory power in relation to education and migratory patterns of minorities.

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File URL: http://www.biu.ac.il/soc/ec/wp/17-01/17-01.pdf
File Function: Working paper
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Bibliographic Info

Paper provided by Department of Economics, Bar-Ilan University in its series Working Papers with number 2001-17.

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Date of creation: Oct 2001
Date of revision:
Handle: RePEc:biu:wpaper:2001-17

Contact details of provider:
Postal: Faculty of Social Sciences, Bar Ilan University 52900 Ramat-Gan
Phone: Phone: +972-3-5318345
Fax: +972-3-7384034
Email:
Web page: http://econ.biu.ac.il
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Related research

Keywords: Macroeconomic instability; Income volatility; Migration; Human capital; Ethnic discrimination; Ethnic conflicts; Minorities.;

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References

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  1. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  2. Karnit Flug & Antonio Spilimbergo & Erik Wachtenheim, 1996. "Investment in Education: Do Economic Volatility and Credit Constraints Matter?," Research Department Publications 4000, Inter-American Development Bank, Research Department.
  3. Elbadawi, Ibrahim & Schmidt-Hebbel, Klaus, 1998. "Macroeconomic Policies, Instability and Growth in the World," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 7(0), pages 116-68, December.
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  5. Burda,M.C., 1995. "Migration and the Option Value of Waiting," Papers 597, Stockholm - International Economic Studies.
  6. 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.
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  8. Alesina, Alberto, et al, 1996. " Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
  9. Johnson, R-W & DaVanzo, J, 1997. "Economic and Cultural Influences on the Decision to Leave Home in Peninsular Malaysia," Papers 97-03, RAND - Labor and Population Program.
  10. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
  11. Galor, O. & Tsiddon, D., 1996. "The Distribution of Human Capital and Economic Growth," Papers 18-96, Tel Aviv - the Sackler Institute of Economic Studies.
  12. Gunewardena, Dileni & Van de Walle, Dominique, 2000. "Sources of ethnic inequality in Vietnam," Policy Research Working Paper Series 2297, The World Bank.
  13. 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.
  14. Gani, Azmat & Ward, Bert D., 1995. "Migration of professionals from Fiji to New Zealand: A reduced form supply-demand model," World Development, Elsevier, vol. 23(9), pages 1633-1637, September.
  15. Comay, Yochanan & Melnik, A & Pollatschek, M A, 1973. "The Option Value of Education and the Optimal Path for Investment in Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 421-35, June.
  16. Katz, Eliakim & Stark, Oded, 1989. "International labour migration under alternative informational regimes: A diagrammatic analysis," European Economic Review, Elsevier, vol. 33(1), pages 127-142, January.
  17. Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont & Brun, Jean-Francois, 1999. "How Instability Lowers African Growth," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(1), pages 87-107, March.
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  19. Djajic, Slobodan, 1989. "Skills and the Pattern of Migration: The Role of Qualitative and Quantitative Restrictions on International Labor Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 795-809, November.
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Cited by:
  1. Frédéric Docquier & Hillel Rapoport, 2001. "Ethnic Discrimination and the Migration of Skilled Labor," Working Papers 2001-19, Department of Economics, Bar-Ilan University.

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