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Will Transition Countries Benefit or Lose from the Brain Drain?

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Author Info

  • Lundborg, Per

    (Trade Union Institute for Economic Research)

  • Rechea, Calin

    (Department of Economics)

Abstract

We analyze the theoretical effects on growth and welfare in transition economies of emigration of educated and uneducated labor, of higher emigration probability, etc. Using a Grossman-Helpman growth model, we show that the prospects of labor market integration with the EU raises the expected returns to education, stimulate human capital formation and thus raise the growth rate in the candidate countries. However, given this expected returns, emigration of educated workers tends to lower growth and welfare of those remaining. Thus, while the brain drain reduces welfare, the effects of labor market integration could nevertheless be positive. Emigration of low skilled workers also reduces growth via adverse effects on education. Higher tuition fees, common in transition countries, counteract positive growth effects of market determined wages.

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File URL: http://swopec.hhs.se/fiefwp/papers/WP187.pdf
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Bibliographic Info

Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number 187.

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Length: 18 pages
Date of creation: 27 Dec 2002
Date of revision:
Publication status: Published in International Journal of Economic Development , 2003.
Handle: RePEc:hhs:fiefwp:0187

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Keywords: Migration; Growth; Welfare;

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References

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  1. Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
  2. Lam, Kit-Chun, 2002. "Interaction between Economic and Political Factors in the Migration Decision," Journal of Comparative Economics, Elsevier, vol. 30(3), pages 488-504, September.
  3. Lundborg, Per & Segerstrom, Paul S., 1998. "The Growth and Welfare Effects of International Mass Migration," Working Paper Series 146, Trade Union Institute for Economic Research.
  4. Miyagiwa, K., 1989. "Scale Economics In Education And The Brain Drain Problem," Working Papers 89-09, University of Washington, Department of Economics.
  5. 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.
  6. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
  7. Nadeem U. Haque & Se-Jik Kim, 1995. "“Human Capital Flight”: Impact of Migration on Income and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 577-607, September.
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Citations

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Cited by:
  1. Selén, Jan & Ståhlberg, Ann-Charlotte, 2004. "Wage and Compensation Inequality — How Different?," Working Paper Series 197, Trade Union Institute for Economic Research.
  2. Barbara Dietz, 2007. "Migration policy challenges at the new Eastern borders of the enlarged European Union : The Ukrainian case," Working Papers 267, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  3. Lundborg, Per, 2005. "Wage Fairness, Growth and the Utilization of R&D Workers," Working Paper Series 206, Trade Union Institute for Economic Research.
  4. Barbara Dietz, 2010. "Migration and Remittances in Macedonia : A Review," Working Papers 281, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).

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