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Differential migration prospects, skill formation, and welfare

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  • Stark, Oded
  • Zakharenko, Roman

Abstract

This paper develops a one sector, two-input model with endogenous human capital formation. The two inputs are two types of skilled labor: engineering, which exerts a positive externality on total factor productivity, and law, which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the(inefficient) free-market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration lottery, and even the individuals who practice law. --

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Bibliographic Info

Paper provided by University of Tuebingen, Faculty of Economics and Social Sciences in its series University of Tuebingen Working Papers in Economics and Finance with number 22.

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Date of creation: 2011
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Handle: RePEc:zbw:tuewef:22

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Keywords: heterogeneous human capital; differential externality effects; migration of educated workers; human capital formation; efficient acquisition of human capital; beneficial brain drain;

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References

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  1. Iyigun, Murat F & Owen, Ann L, 1998. "Risk, Entrepreneurship, and Human-Capital Accumulation," American Economic Review, American Economic Association, vol. 88(2), pages 454-57, May.
  2. Stark, Oded & Casarico, Alessandra & Devillanova, Carlo & Uebelmesser, Silke, 2011. "On the formation of international migration policies when no country has an exclusive policy-setting say," Discussion Papers 117431, University of Bonn, Center for Development Research (ZEF).
  3. David N. Weil, 2007. "Accounting for The Effect of Health on Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 122(3), pages 1265-1306, 08.
  4. Giordani, Paolo & Ruta, Michele, 2009. "The Immigration Policy Puzzle," MPRA Paper 23584, University Library of Munich, Germany.
  5. Paul A. David, 2005. "The Tale of Two Traverses: Innovation and Accumulation in the First Two Centuries of U.S. Economic Growth," Discussion Papers 05-022, Stanford Institute for Economic Policy Research.
  6. Paul A. David, 2005. "Reforming the Taxation of Human Capital: A Modest Proposal for Promoting Economic Growth," HEW 0502002, EconWPA.
  7. Iyigun, Murat F & Owen, Ann L, 1999. " Entrepreneurs, Professionals, and Growth," Journal of Economic Growth, Springer, vol. 4(2), pages 213-32, June.
  8. Paul A. David, 2005. "Two Centuries of American Macroeconomic Growth From Exploitation of Resource Abundance to Knowledge-Driven Development," Macroeconomics 0502021, EconWPA.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Why India should let engineers and doctors emigrate
    by Economic Logician in Economic Logic on 2012-01-11 15:28:00
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Cited by:
  1. Zakharenko, Roman, 2012. "Human capital acquisition and international migration in a model of educational market," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 808-816.

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