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Effective Cost of Brain Drain

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Author Info

  • Bouoiyour, Jamal
  • Jellal, Mohamed
  • Wollf, François-Charles

Abstract

In developing countries, remittances and intra-family private transfers sent by household members who migrate to more developed countries constitute a fundamental source of income and capital accumulation. Then, it is important to understand the motives of migrants who decide to remit back to their families. Drawing on the theory of labor migration under asymmetric information, we show that low-skilled workers are expected to provide higher amounts of remittances when remittances are motivated by self-interest. This transfer paradox is explained as follows. Since low skilled workers are likely to return home when informational symmetry is restored, the optimal remittance level is a decreasing function of the migrant's skill level since remittances may be seen as an implicit insurance, whose benefits are received only under migration return.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29176.

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Date of creation: Mar 2003
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Handle: RePEc:pra:mprapa:29176

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Related research

Keywords: Remittances; asymmetric information; migration;

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References

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  1. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-76, July.
  2. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A Brain Gain with a Brain Drain," Economics Series 45, Institute for Advanced Studies.
  3. 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.
  4. Hillel Rapoport & Frederic Docquier, 1998. "Are migrant minorities strategically self-selected?," Journal of Population Economics, Springer, vol. 11(4), pages 579-588.
  5. Miyagiwa, Kaz, 1991. "Scale Economies in Education and the Brain Drain Problem," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 743-59, August.
  6. Nadeem U. Haque & Se-Jik Kim, 1995. "“Human Capital Flight”: Impact of Migration on Income and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 577-607, September.
  7. repec:imf:imfwpa:94/155 is not listed on IDEAS
  8. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
  9. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  10. Stark,Oded, 1999. "Altruism and Beyond," Cambridge Books, Cambridge University Press, number 9780521663731, November.
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Cited by:
  1. Driouchi, Ahmed & Boboc, Cristina & Zouag, Nada, 2009. "Emigration of Highly Skilled Labor: Determinants & Impacts," MPRA Paper 21567, University Library of Munich, Germany, revised 23 Mar 2010.
  2. Peter Schaeffer, 2005. "Human capital, migration strategy, and brain drain," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(3), pages 319-335.

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