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Brain Drain, Fiscal Competition, and Public Education Expenditure

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Author Info
Hartmut Egger () (University of Zurich, CESifo and GEP)
Josef Falkinger () (University of Zurich, CESifo and IZA)
Volker Grossmann () (University of Fribourg, CESifo and IZA)

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Abstract

This paper uses a two-country model with integrated markets for high-skilled labor to analyze the opportunities and incentives for national governments to provide higher education. Countries can differ in productivity, and education is financed through a wage tax, so that brain drain affects the tax base and has agglomeration effects. We study unilateral possibilities for triggering or avoiding brain drain and compare education policies and migration patterns in non-cooperative political equilibria with the consequences of bilateral cooperation between countries. We thereby demonstrate that bilateral coordination tends to increase public education expenditure compared to non-cooperation. At the same time, it aims at preventing migration. This is not necessarily desirable from the point of view of a social planner who takes account of the interests of migrants.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2747.

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Length: 46 pages
Date of creation: Apr 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2747

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Related research
Keywords: brain drain; educational choice; public education policy; locational competition;

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Find related papers by JEL classification:
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Silke Uebelmesser, 2006. "To Go or Not to Go: Emigration from Germany," German Economic Review, Blackwell Publishing, vol. 7, pages 211-231, 05. [Downloadable!] (restricted)
    Other versions:
  2. Justman, Moshe & Thisse, Jacques-Francois, 1997. "Implications of the mobility of skilled labor for local public funding of higher education," Economics Letters, Elsevier, vol. 55(3), pages 409-412, September. [Downloadable!] (restricted)
  3. Sascha O. Becker & Andrea Ichino & Giovanni Peri, 2004. "How Large Is the "Brain Drain" from Italy?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 63(1), pages 1-32, April. [Downloadable!]
    Other versions:
  4. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February. [Downloadable!] (restricted)
  5. Panu Poutvaara, 2004. "Public Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  6. Panu Poutvaara & Vesa Kanniainen, 2000. "Why Invest in Your Neighbor? Social Contract on Educational Investment," International Tax and Public Finance, Springer, vol. 7(4), pages 547-562, August. [Downloadable!] (restricted)
  7. Panu Poutvaara, 2003. "Educating Europe," Public Economics 0302008, EconWPA. [Downloadable!]
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  8. Andersson, Fredrik & Konrad, Kai A., 2003. "Human capital investment and globalization in extortionary states," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1539-1555, August. [Downloadable!] (restricted)
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  9. Bucovetsky, S., 2003. "Efficient migration and redistribution," Journal of Public Economics, Elsevier, vol. 87(11), pages 2459-2474, October. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Hartmut Egger & Gabriel J Felbermayr, 2009. "Endogenous Skill Formation and the Source Country Effects of Emigration," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 308/2009, Department of Economics, University of Hohenheim, Germany. [Downloadable!]
  2. Hartmut Egger & Gabriel J. Felbermayr, 2007. "Endogenous Skill Formation and the Source Country Effects of International Labor Market Integration," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  3. Grossmann, Volker & Stadelmann, David, 2008. "International Mobility of the Highly Skilled, Endogenous R&D, and Public Infrastructure Investment," IZA Discussion Papers 3366, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Rosalind S Hunter, 2009. "The Elite Brain Drain," Working Papers id:2048, esocialsciences.com. [Downloadable!]
  5. Hunter, Rosalind S. & Oswald, Andrew J. & Charlton, Bruce G., 2009. "The Elite Brain Drain," IZA Discussion Papers 4005, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
    • RosalindS. Hunter & AndrewJ. Oswald & BruceG. Charlton, 2009. "The Elite Brain Drain," Economic Journal, Royal Economic Society, vol. 119(538), pages F231-F251, 06. [Downloadable!] (restricted)
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