Inducing Human Capital Formation: Migration as a Substitute for Subsidies
AbstractWhen productivity is fostered by an individual's own human capital as well as by the economy-wide average level of human capital, individuals under-invest in human capital. The provision of subsidies for the formation of human capital, conditional on the subsidy being self-financed by tax revenues, can bring the economy to its socially optimal level of human capital. Yet a strictly positive probability of migration to a richer country, by raising both the level of human capital formed by optimizing individuals in the home country and the average level of human capital of non-migrants in the country, can enhance welfare and nudge the economy toward the social optimum. Indeed, under a well-controlled, restrictive migration policy the welfare of all workers is higher than in the absence of this policy.
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Bibliographic InfoPaper provided by Institute for Advanced Studies in its series Economics Series with number 100.
Length: 18 pages
Date of creation: Apr 2001
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Other versions of this item:
- Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October.
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stark, Oded, 1995. " Return and Dynamics: The Path of Labor Migration When Workers Differ in Their Skills and Information Is Asymmetric," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(1), pages 55-71, March.
- Stark, Oded & Chau, Nancy H., 1998.
"Human Capital Formation, Asymmetric Information, and the Dynamics of International Migration,"
52, Institute for Advanced Studies.
- Nancy H. Chau & Oded Stark, 1998. "Human Capital Formation, Asymmetric Information, and the Dynamics of International Migration," Departmental Working Papers _095, Chinese University of Hong Kong, Department of Economics.
- Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997.
"A Brain Gain with a Brain Drain,"
45, Institute for Advanced Studies.
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