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Brain Drain, Brain Gain and Economic Growth in China

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Author Info

  • Wei Ha

    ()
    (Policy Specialist at the Human Development Report Office, UNDP)

  • Junjian Yi

    ()
    (Economics Department of the Chinese University of Hong Kong)

  • Junsen Zhang

    ()
    (Economics Department of the Chinese University of Hong Kong)

Abstract

This paper examines the effects of both permanent and temporary emigration on human capital formation and economic growth of the source regions. To achieve this end, this paper explores the Chinese provincial panel data from 1980 to 2005. First, the fixed effects model is employed to estimate the effect of emigration on school enrollment rates in the source regions. Relative to this aspect, we find that the magnitude (scale) of permanent emigrants (measured by the permanent emigration ratio) is conducive to the improvement of both middle and high schools enrollments. In contrast, the magnitude of temporary emigrants has a significantly positive effect on middle school enrollment but does not have a significant effect on high school enrollment. More interestingly, different educational attainments of temporary emigrants have different effects on school enrollment. Specifically, the share of temporary emigrants with high school education positively affects middle school enrollment, while the share of temporary emigrants with middle school education negatively affects high school enrollment. Second, the instrumental variable method is applied to estimate the effect of emigration on economic growth within the framework of system Generalized Method of Moments (GMM). The estimation results suggest that both permanent and temporary emigrations have a detrimental effect on the economic growth of the source regions. Our empirical tests provide some new evidence to the "brain drain" debate, which has recently received increasing attention.

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Bibliographic Info

Paper provided by Human Development Report Office (HDRO), United Nations Development Programme (UNDP) in its series Human Development Research Papers (2009 to present) with number HDRP-2009-37.

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Length: 39 pages
Date of creation: Aug 2009
Date of revision: Aug 2009
Publication status: Published as background research for the 2009 Human Development Report.
Handle: RePEc:hdr:papers:hdrp-2009-37

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Keywords: Brain drain; human capital; emigration; economic growth;

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  1. 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.
  2. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  3. Docquier, Frederic & Rapoport, Hillel, 2004. "Skilled migration: the perspective of developing countries," Policy Research Working Paper Series 3382, The World Bank.
  4. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, Elsevier, vol. 1(1), pages 19-42, April.
  5. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
  6. Michel, BEINE & Frédéric, DOCQUIER & Hillel, RAPOPORT, 2006. "Brain drain and human capital formation in developing countries : winners and losers," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2006023, Université catholique de Louvain, Département des Sciences Economiques.
  7. Galor, Oded, 1996. "Convergence? Inferences from Theoretical Models," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(437), pages 1056-69, July.
  8. Karin Mayr & Giovanni Peri, 2008. "Return Migration as a Channel of Brain Gain," NBER Working Papers 14039, National Bureau of Economic Research, Inc.
  9. Di Maria, Corrado & Stryszowski, Piotr, 2009. "Migration, human capital accumulation and economic development," Journal of Development Economics, Elsevier, Elsevier, vol. 90(2), pages 306-313, November.
  10. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 29-51, July.
  11. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
  12. Michel Beine & Frédéric Docquier & Hillel Rapoport, 2002. "Brain Drain and LDCs' Growth: Winners and Losers," Working Papers, Bar-Ilan University, Department of Economics 2002-08, Bar-Ilan University, Department of Economics.
  13. Shahid Yusuf & Tony Saich, 2008. "China Urbanizes : Consequences, Strategies, and Policies," World Bank Publications, The World Bank, number 6337, August.
  14. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(4), pages 1127-70, November.
  15. Knight, John & Song, Lina, 1999. "The Rural-Urban Divide: Economic Disparities and Interactions in China," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198293309, October.
  16. Zhang, Junsen & Zhao, Yaohui & Park, Albert & Song, Xiaoqing, 2005. "Economic returns to schooling in urban China, 1988 to 2001," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 730-752, December.
  17. Meng,Xin, 2009. "Labour Market Reform in China," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521121118.
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