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The Lame Drain

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  • Dong, Baomin
  • Fu, Shihe
  • Gong, Jiong
  • Fan, Hanwen
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Abstract

This paper develops a signaling theory where brain drain as well as the opposite of brain drain, a phenomenon we call “lame-drain” can result. In particular, we assume there are three types of agents according to their intrinsic abilities; education (with endogenous intensity) consists of two stages: undergraduate and graduate. There are two types of jobs: entry level and managerial. It is shown that under some circumstances the equilibrium is semi-pooling where the medium type chooses to work after undergraduate education while (a fraction of) both high and low types pursue graduate studies at home and abroad. Some high and low ability students return to work in the indigenous country in equilibrium. However, our model differs from the traditional brain drain models in that some low ability agents also go abroad in equilibrium and work in the host country after graduation, resulting in the recipient country hiring low ability agents, a phenomenon we call lame-drain. We then provide empirical evidence that lame-drain is indeed happening using U.S. Census data.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 53825.

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Date of creation: 14 Feb 2014
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Handle: RePEc:pra:mprapa:53825

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Related research

Keywords: Brain Drain; Lame Drain; Signalling;

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References

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  1. Lien, Da-Hsiang Donald, 1987. "Asymmetric information and multi-stage brain drain," Economics Letters, Elsevier, vol. 23(3), pages 305-309.
  2. Swinkels, Jeroen M, 1999. "Education Signalling with Preemptive Offers," Review of Economic Studies, Wiley Blackwell, vol. 66(4), pages 949-70, October.
  3. Hamada, Koichi & Bhagwati, Jagdish, 1975. "Domestic distortions, imperfect information and the brain drain," Journal of Development Economics, Elsevier, vol. 2(3), pages 265-279, September.
  4. Stark, Oded & Fan, C. Simon, 2010. "A Theory of Migration as a Response to Occupational Stigma," Economics Series 247, Institute for Advanced Studies.
  5. John Gibson & David McKenzie, 2011. "Eight Questions about Brain Drain," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 107-28, Summer.
  6. Donald Lien & Yan Wang, 2005. "Brain drain or brain gain: A revisit," Journal of Population Economics, Springer, vol. 18(1), pages 153-163, 07.
  7. Shihe Fu & Stephen Ross, 2010. "Wage Premia in Employment Clusters: How Important is Worker Heterogeneity?," Working Papers 2011-027, Human Capital and Economic Opportunity Working Group.
  8. Katz, Eliakim & Stark, Oded, 1987. "International Migration under Asymmetric Information," Economic Journal, Royal Economic Society, vol. 97(387), pages 718-26, September.
  9. Doh-Shin Jeon & Domenico Menicucci, 2005. "Money, fame and the allocation of talent: Brain drain and the institution of science," Economics Working Papers 805, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2005.
  10. Rodriguez, Carlos Alfredo, 1975. "Brain drain and economic growth : A dynamic model," Journal of Development Economics, Elsevier, vol. 2(3), pages 223-247, September.
  11. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
  12. Pedro Ortín-Ángel & Vicente Salas-Fumás, 2007. "Compensation Dispersion Between and Within Hierarchical Levels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 53-79, 03.
  13. Lien, Da-Hsiang Donald, 1988. "Appropriate scientific research and brain drain : A simple model," Journal of Development Economics, Elsevier, vol. 29(1), pages 77-87, July.
  14. Commander, Simon & Kangasniemi, Mari & Winters, L. Alan, 2003. "The Brain Drain: Curse or Boon?," IZA Discussion Papers 809, Institute for the Study of Labor (IZA).
  15. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
  16. Mattoo, Aaditya & Neagu, Ileana Cristina & Özden, Çaglar, 2008. "Brain waste? Educated immigrants in the US labor market," Journal of Development Economics, Elsevier, vol. 87(2), pages 255-269, October.
  17. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  18. Fan, C. Simon & Stark, Oded, 2007. "International migration and "educated unemployment"," Journal of Development Economics, Elsevier, vol. 83(1), pages 76-87, May.
  19. Lien, Da-Hsiang Donald, 1987. "Economic analysis of brain drain," Journal of Development Economics, Elsevier, vol. 25(1), pages 33-43, February.
  20. Sanghoon Lee, 2007. "The Timing Of Signaling: To Study In High School Or In College?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 785-807, 08.
  21. K. Hamada & J. N. Bhagwati, 1975. "Domestic Distortions, Imperfect Information and the Brain Drain," Working papers 161, Massachusetts Institute of Technology (MIT), Department of Economics.
  22. Hanming Fang, 2006. "Disentangling The College Wage Premium: Estimating A Model With Endogenous Education Choices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(4), pages 1151-1185, November.
  23. repec:wyi:journl:002155 is not listed on IDEAS
  24. Spence, Michael, 1976. "Competition in Salaries, Credentials, and Signaling Prerequisites for Jobs," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 51-74, February.
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