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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. Singh, Sunny Kumar & Hari, K.S., 2011. "International Migration, Remittances and its Macroeconomic Impact on Indian Economy," IIMA Working Papers WP2011-01-06, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. 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.
    3. John Gibson & David McKenzie, 2011. "Eight Questions about Brain Drain," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 107-128, Summer.
    4. Samuel Munzele Maimbo & Dilip Ratha, 2005. "Remittances: Development Impact and Future Prospects," World Bank Publications, The World Bank, number 7339.
    5. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.
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    7. Frédéric Docquier & Hillel Rapoport, 2012. "Globalization, Brain Drain, and Development," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 681-730, September.
    8. Docquier Frédéric & Rapoport Hillel, 2009. "Documenting the Brain Drain of “La Crème de la Crème”: Three Case-Studies on International Migration at the Upper Tail of the Education Distribution," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(6), pages 679-705, December.
    9. Michael A. Clemens, 2009. "Skill Flow: A Fundamental Reconsideration of Skilled-Worker Mobility and Development," Human Development Research Papers (2009 to present) HDRP-2009-08, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Apr 2009.
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    12. repec:eee:ecosys:v:41:y:2017:i:3:p:333-353 is not listed on IDEAS
    13. Alkhathlan, Khalid A., 2013. "The nexus between remittance outflows and growth: A study of Saudi Arabia," Economic Modelling, Elsevier, vol. 33(C), pages 695-700.
    14. Qin, Fei, 2015. "Global talent, local careers: Circular migration of top Indian engineers and professionals," Research Policy, Elsevier, vol. 44(2), pages 405-420.
    15. Nijkamp, P. & Poot, H.J., 2012. "Migration impact assessment: A state of the art," Serie Research Memoranda 0009, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    16. Wilson, John Douglas, 2008. "A voluntary brain-drain tax," Journal of Public Economics, Elsevier, vol. 92(12), pages 2385-2391, December.
    17. D'Costa, Anthony P., 2006. "The International Mobility of Technical Talent: Trends and Development Implications," WIDER Working Paper Series 143, World Institute for Development Economic Research (UNU-WIDER).
    18. repec:eee:poleco:v:52:y:2018:i:c:p:141-165 is not listed on IDEAS
    19. Ilene Grabel, 2008. "The Political Economy of Remittances: What Do We Know? What Do We Need to Know?," Working Papers wp184, Political Economy Research Institute, University of Massachusetts at Amherst.
    20. 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..
    21. Ted Davis & David M. Hart, 2010. "International Cooperation to Manage High-Skill Migration: The Case of India-U.S. Relations," Review of Policy Research, Policy Studies Organization, vol. 27(4), pages 509-526, July.
    22. Hatton, Timothy J., 2014. "The economics of international migration: A short history of the debate," Labour Economics, Elsevier, vol. 30(C), pages 43-50.
    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.
    25. Kuschminder, Katie & Hercog, Metka, 2011. "The power of the strong state: A comparative analysis of the diaspora engagement strategies of India and Ethiopia," MERIT Working Papers 044, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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