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Brain Drain in Globalization: A General Equilibrium Analysis from the Sending Countries' Perspective

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Author Info

  • Marchiori, Luca

    ()
    (Central Bank of Luxembourg)

  • Shen, I-Ling

    ()
    (Milken Institute)

  • Docquier, Frédéric

    ()
    (Université catholique de Louvain)

Abstract

The paper assesses the global effects of brain drain on developing economies and quantifies the relative sizes of various static and dynamic impacts. By constructing a unified generic framework characterized by overlapping-generations dynamics and calibrated to real data, this study incorporates many direct impacts of brain drain whose interactions, along with other indirect effects, are endogenously and dynamically generated. Our findings suggest that the short-run impact of brain drain on resident human capital is extremely crucial, as it does not only determine the number of skilled workers available to domestic production, but it also affects the sending economy's capacity to innovate or to adopt modern technologies. The latter impact plays an important role particularly in a globalized economy where capital investments are made in places with higher production efficiencies ceteris paribus. Hence, in spite of several empirically documented positive feedback effects, those countries with high skilled emigration rates are the most candid victims to brain drain since they are least likely to benefit from the "brain gain" effect, and thus suffering from declines of their resident human capital.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4207.

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Length: 47 pages
Date of creation: Jun 2009
Date of revision:
Publication status: published in: Economic Inquiry, 2013, 51 (2), 1582–1602
Handle: RePEc:iza:izadps:dp4207

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Keywords: remittances; human capital; development; capital flow; brain drain;

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References

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Cited by:
  1. Vladimir BORGY & Xavier CHOJNICKI & Gilles LE GARREC & Cyrille SCHWELLNUS, 2010. "Macroeconomic Consequences of Global Endogenous Migration: a General Equilibrium Analysis," Annales d'Economie et de Statistique, ENSAE, issue 97-98, pages 13-39.
  2. Vikhrov Dmytro, 2013. "Welfare Effects of Labor Migration," CERGE-EI Working Papers wp491, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  3. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
  4. Christian Dustmann & Albrecht Glitz, 2011. "Migration and Education," Norface Discussion Paper Series 2011011, Norface Research Programme on Migration, Department of Economics, University College London.
  5. Harald Fadinger & Karin Mayr, 2012. "Skill-biased technological change, unemployment and brain drain," FIW Working Paper series 089, FIW.
  6. Frédéric Docquier & Luca Marchiori, 2010. "The impact of MENA-to-EU migration in the context of demographic change," CREA Discussion Paper Series 10-18, Center for Research in Economic Analysis, University of Luxembourg.
  7. Andrea Caragliu & Peter Nijkamp, 2013. "From Islands to Hubs of Innovation: Connecting Innovative Regions," Tinbergen Institute Discussion Papers 13-141/VIII, Tinbergen Institute.

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