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The fiscal impact of high-skilled emigration: Flows of Indians to the U.S

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  • Desai, Mihir A.
  • Kapur, Devesh
  • McHale, John
  • Rogers, Keith

Abstract

What are the fiscal consequences of high-skilled emigration for source countries? This paper develops methodologies for inferring these consequences and applies them to the recent sizable emigration of high-skilled workers from India to the U.S. This wave of emigration from India to the U.S. is shown to be unusually concentrated amongst the prime-age work force, the highly educated and high earners. In order to calculate the fiscal losses associated with these emigrants, estimates of their counterfactual earnings distributions are generated using two distinct methods and integrated with a model of the Indian fiscal system to calculate fiscal consequences. Conservative estimates indicate that the annual net fiscal impact to India of high-skilled emigration to the U.S. is one-half of 1% of gross national income (or 2.5% of total fiscal revenues). The sensitivity of these results to the method of predicting counterfactual incomes and the implications of these estimates for other developing countries is discussed in detail.

Suggested Citation

  • Desai, Mihir A. & Kapur, Devesh & McHale, John & Rogers, Keith, 2009. "The fiscal impact of high-skilled emigration: Flows of Indians to the U.S," Journal of Development Economics, Elsevier, vol. 88(1), pages 32-44, January.
    • Handle: RePEc:eee:deveco:v:88:y:2009:i:1:p:32-44
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    References listed on IDEAS

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    Cited by:

    1. Gordon H. Hanson, 2009. "The Economic Consequences of the International Migration of Labor," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 179-208, May.
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    11. repec:eee:ecosys:v:41:y:2017:i:3:p:333-353 is not listed on IDEAS
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    13. Rina Agarwala, 2012. "Tapping the Indian Diaspora for Indian Development," Working Papers 1407, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Migration and Development..
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    23. Okoye, Dozie, 2016. "Can brain drain be good for human capital growth? Evidence from cross-country skill premiums and education costs," Economic Analysis and Policy, Elsevier, vol. 49(C), pages 74-99.
    24. Sunil Mani, 2009. "High Skilled Migration from India An Analysis of its Economic Implications," Working Papers id:2344, eSocialSciences.

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