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Is migration a good substitute for education subsidies?

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  • DOCQUIER, Frédéric
  • FAYE, Ousmane
  • PESTIEAU, Pierre

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. This paper introduces educational subsidies determined by governments concerned by the number of skilled workers remaining in the country. The 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. The authors investigate the empirical relationship between educational subsidies and migration prospects, obtaining a negative relationship for 105 countries. Based on this result, the analysis revisits the country specific effects of skilled migration upon human capital. The findings show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2022.

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Handle: RePEc:cor:louvrp:-2022

Note: In : Journal of Development Economics, 86, 263-276, 2008
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  1. Edward L. Glaeser & Gary S. Becker & Kevin M. Murphy, 1999. "Population and Economic Growth," American Economic Review, American Economic Association, vol. 89(2), pages 145-149, May.
  2. 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.
  3. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  4. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers 536, Harvard - Institute for International Development.
  5. 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.
  6. Commander, Simon & Chanda, Rupa & Kangasniemi, Mari & Winters, L. Alan, 2004. "Must Skilled Migration Be a Brain Drain? Evidence from the Indian Software Industry," IZA Discussion Papers 1422, Institute for the Study of Labor (IZA).
  7. Catia Batista & 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.
  8. Michel Beine & Frederic 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.
  9. Galor, Oded & Weil, David, 1999. "From Malthusian Stagnation to Modern Growth," CEPR Discussion Papers 2082, C.E.P.R. Discussion Papers.
  10. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  11. 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.
  12. 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.
  13. Nils-Petter Lagerloef, 2000. "From Malthus to Modern Growth: The Three Regimes Revisited," Econometric Society World Congress 2000 Contributed Papers 1248, Econometric Society.
  14. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  15. 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.
  16. Mari Kangasniemi & L. Alan Winters & Simon Commander, 2004. "Is the medical brain drain beneficial? Evidence from overseas doctors in the UK," LSE Research Online Documents on Economics 19984, London School of Economics and Political Science, LSE Library.
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