We consider the welfare effects of skilled worker emigration in a context where skilled labor plays a role in product design. We show such emigration can benefit the residents left behind, even when consumers’ tastes exhibit a form of home bias. This is because emigration improves the design of goods designed by skilled emigrants but consumed in the sending country. In contrast to existing models of beneficial brain drain, our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration “lottery”. Instead, they are driven purely by differences in market size that induce skilled emigrants to design better products abroad than at home.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
3602.
Find related papers by JEL classification: F22 - International Economics - - International Factor Movements and International Business - - - International Migration J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights
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