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

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  • Oded Stark

    ()

  • C. Simon Fan

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 Centre for Economic Development and Institutions(CEDI), Brunel University in its series CEDI Discussion Paper Series with number 07-01.

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Length: 39 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:edb:cedidp:07-01

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  1. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May.
  2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988. "Industrialization and the Big Push," NBER Working Papers 2708, National Bureau of Economic Research, Inc.
  3. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-22, April.
  4. Stark, Oded, 2003. "Rethinking The Brain Drain," Discussion Papers 18770, University of Bonn, Center for Development Research (ZEF).
  5. 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.
  6. Eric A. Hanushek, 1996. "Measuring Investment in Education," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 9-30, Fall.
  7. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
  8. Acemoglu, D., 1997. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," Working papers 97-14, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  10. 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.
  11. 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.
  12. Fan, C. Simon, 2004. "Quality, trade, and growth," Journal of Economic Behavior & Organization, Elsevier, vol. 55(2), pages 271-291, October.
  13. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A Brain Gain with a Brain Drain," Economics Series 45, Institute for Advanced Studies.
  14. Oded Stark, 2005. "The New Economics of the Brain Drain," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 6(2), pages 137-140, April.
  15. Fan, C. Simon & Stark, Oded, 2007. "International migration and "educated unemployment"," Journal of Development Economics, Elsevier, vol. 83(1), pages 76-87, May.
  16. 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..
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Cited by:
  1. 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.
  2. 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.
  3. Byra, Lukasz, 2013. "Rethinking the brain drain: Dynamics and transition," International Review of Economics & Finance, Elsevier, vol. 28(C), pages 19-25.

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