Brain drain and economic growth: theory and evidence
AbstractWe focus on the impact of migration prospects on human capital formation and growth in a small, open developing economy. We assume that agents are heterogeneous in skills and take their educational decisions in a context of uncertainty regarding future migrations. We distinguish two growth effects: an ex ante “brain effect” (migration prospects foster investments in education because of higher returns abroad), and an ex post “drain effect” (because of actual migration flows). The case for a beneficial brain drain (BBD) emerges when the first effect dominates, i.e., when the average level of human capital is higher in the economy opened to migrations than in the closed economy. We derive the theoretical conditions required for such a possibility to be observed. Using cross-section data for 37 developing countries, we find that the possibility of a BBD could be more than a theoretical curiosity.
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Bibliographic InfoPaper provided by Université catholique de Louvain in its series Open Access publications from Université catholique de Louvain with number info:hdl:2078/96110.
Date of creation: 2001
Date of revision:
Publication status: Published in Journal of Development Economics (2001) v.64, p.275-289
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Web page: http://www.uclouvain.be
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