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Can brain drain be good for human capital growth? Evidence from cross-country skill premiums and education costs

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  • Okoye, Dozie

Abstract

I study conditions under which a low-skill economy can grow its skilled labor force in the presence of brain drain. This occurs when skill premiums are low, and there are individuals in the economy who can afford an education. The model is calibrated to data on 23 low and middle-income countries. For 22 of the 23 countries, any increase in the rate of skilled emigration leads to a decline in the steady-state proportion of skilled workers. This is because increasing emigration rates does not affect current schooling costs which are binding at the margin. I provide some empirical evidence that the cost of education is relatively high in these countries, and that costs are likely binding because of the (un)availability of student loan programs. For brain drain to lead to a net increase in human capital, reducing education barriers and relaxing credit constraints are important policy responses.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecanpo:v:49:y:2016:i:c:p:74-99
    DOI: 10.1016/j.eap.2015.12.002
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    References listed on IDEAS

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    More about this item

    Keywords

    International migration; Brain drain; Education; Development;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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