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Wage Effects of High-Skilled Migration: International Evidence

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  • Grossmann, Volker

    ()
    (University of Fribourg)

  • Stadelmann, David

    ()
    (University of Fribourg)

Abstract

This paper argues that international migration of high-skilled workers triggers productivity effects at the macro level such that the wage rate of skilled workers may rise in host countries and decline in source countries. We exploit a recent data set on international bilateral migration flows and provide evidence which is consistent with this hypothesis. We propose different instrumentation strategies to identify the causal effect of skilled migration on log differences of GDP per capita, total factor productivity, and wages of skilled workers between pairs of source and destination countries. These address the endogeneity problem which potentially arises when international wage differences affect migration decisions.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6611.

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Length: 30 pages
Date of creation: May 2012
Date of revision:
Publication status: published in: World Bank Economic Review, 2013, 27 (2), 297-319
Handle: RePEc:iza:izadps:dp6611

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Keywords: wage effects; international high-skilled migration; total factor productivity;

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References

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  1. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  2. Cristina Cattaneo, 2009. "International Migration, the Brain Drain and Poverty: A Cross-country Analysis," The World Economy, Wiley Blackwell, vol. 32(8), pages 1180-1202, 08.
  3. Edward L. Glaeser & David C. Mare, 1994. "Cities and Skills," NBER Working Papers 4728, National Bureau of Economic Research, Inc.
  4. Oded Stark & Christian Helmenstein & Alexia Prskawetz, 1998. "Human Capital Depletion, Human Capital Formation, and Migration: A Blessing in a "Curse"?," Departmental Working Papers _096, Chinese University of Hong Kong, Department of Economics.
  5. Michel Beine & Frédéric Docquier & Hillel Rapoport, 2001. "Brain drain and economic growth: theory and evidence," ULB Institutional Repository 2013/10449, ULB -- Universite Libre de Bruxelles.
  6. Jeffrey Grogger & Gordon H. Hanson, 2008. "Income Maximization and the Selection and Sorting of International Migrants," NBER Working Papers 13821, National Bureau of Economic Research, Inc.
  7. Peter Egger & Doina Maria Radulescu, 2009. "The Influence of Labour Taxes on the Migration of Skilled Workers," The World Economy, Wiley Blackwell, vol. 32(9), pages 1365-1379, 09.
  8. Nicola Gennaioli & Rafael Laporta & Florencio López-de-Silanes & Andrei Schleifer, 2011. "Human capital and regional development," Economics Working Papers 1286, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2012.
  9. Richard B. Freeman & Remco Oostendorp, 2000. "Wages Around the World: Pay Across Occupations and Countries," NBER Working Papers 8058, National Bureau of Economic Research, Inc.
  10. Michel Beine & Frédéric Docquier & Çaglar Özden, 2009. "Diasporas," CREA Discussion Paper Series 09-15, Center for Research in Economic Analysis, University of Luxembourg.
  11. Thierry Mayer & Soledad Zignago, 2011. "Notes on CEPII’s distances measures: The GeoDist database," Working Papers 2011-25, CEPII research center.
  12. Michel Beine & Frédéric Docquier & Hillel Rapoport, . "Brain drain and human capital formation in developing countries: winners and losers?," ULB Institutional Repository 2013/10415, ULB -- Universite Libre de Bruxelles.
  13. Grossmann, Volker & Stadelmann, David, 2010. "Does International Mobility of High-Skilled Workers Aggravate Between-Country Inequality ?," FSES Working Papers 416, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
  14. 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).
  15. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, vol. 1(1), pages 19-42, April.
  16. Rachel M. Friedberg, 2001. "The Impact Of Mass Migration On The Israeli Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1373-1408, November.
  17. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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Cited by:
  1. Grossmann, Volker & Schäfer, Andreas & Steger, Thomas M., 2013. "Migration, Capital Formation, and House Prices," IZA Discussion Papers 7225, Institute for the Study of Labor (IZA).
  2. Spring, Eva & Grossmann, Volker, 2013. "Does Bilateral Trust Affect International Movement of Goods and Labor?," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79956, Verein für Socialpolitik / German Economic Association.

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