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Addition through Depletion: The Brain Drain as a Catalyst of Human Capital Formation and Economic Betterment

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Author Info

  • Stark, Oded

    (University of Bonn)

  • C Simon Fan

Abstract

Enabling educated individuals to work abroad entails a brain drain and results in educated unemployment at home. Because the prospect of migration raises the expected returns to higher education it also facilitates a "brain gain": a eveloping economy ends up with a higher fraction of educated individuals. Due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation of migration policy pursued in both the current period and the preceding period can greatly facilitate the "take-off" of a developing economy in the current period. Thus we identify a new policy tool that could yield an improvement in the well-being of the population of a developing economy: a controlled migration of educated workers.

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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 192.

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Date of creation: 04 Jun 2003
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Handle: RePEc:ecj:ac2003:192

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Keywords: Brain drain; human capital formation; externalities; economic growth; social welfare;

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Cited by:
  1. Schiff, Maurice, 2005. "Brain Gain: Claims about Its Size and Impact on Welfare and Growth Are Greatly Exaggerated," IZA Discussion Papers 1599, Institute for the Study of Labor (IZA).

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