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A two-country model of high skill migration with public education

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  • Naiditch, Claire

    ()
    (ESSEC Business School)

  • Vranceanu, Radu

    ()
    (ESSEC Business School)

Abstract

This paper proposes a two-country model of migration in a transferable skill sector, where workers'education is provided free of charge by governments. We study firstly the non-cooperative equilibrium where the poor country decides on the education level and the rich country decides on the quota of skilled migrants. Additional migration raises earnings prospects in the source country and attracts more talented people to that profession, what we refer to as the sector-specific brain gain effect. This game presents a single stable equilibrium with positive migration. Compared to the cooperative equilibrium, in the noncooperative equilibrium the poor country systematically under-invests in education. Whether migration is too strong or too weak depends on the size of the brain gain effect. Furthermore, the size of the welfare gain to be reaped by moving from non-cooperative to the cooperative organization of migration also depends on the strength of the sector-specific brain gain.

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Bibliographic Info

Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number WP1301.

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Length: 30 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:ebg:essewp:dr-13001

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Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
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Web page: http://www.essec.edu/
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Keywords: High-skill migration; Brain-gain; Public education; Human capital; Government;

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