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Curbing brain drain: Incentive programs and economic fundamentals in shaping college students’ job location decisions

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  • Liu, Mengqiao
  • Jia, Ruixin
  • Zhang, Yu Yvette

Abstract

Human capital is essential for economic development, and college graduates, as a key component, play a critical role in strengthening regional economies and mitigating brain drain. This study examines how city-based employment incentive programs and regional economic conditions influence college graduates’ job location choices. Using job placement data of college students in China, we apply a Random Coefficients Logit model combined with a Difference-in-Differences approach to capture heterogeneous preferences in job location choices lacking individual-level data. Our analysis shows that college students are more responsive to economic conditions, such as higher GDP and lower unemployment, than to most incentive programs. Among all the incentives considered, only cash subsidies for postgraduates affect job location choices, whereas others, including housing subsidies, show limited effectiveness. These findings suggest that financial incentives alone cannot curb brain drain. Policymakers should focus on strengthening regional economic development alongside targeted incentives to attract and retain talent.

Suggested Citation

  • Liu, Mengqiao & Jia, Ruixin & Zhang, Yu Yvette, 2025. "Curbing brain drain: Incentive programs and economic fundamentals in shaping college students’ job location decisions," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 38-56.
    • Handle: RePEc:eee:ecanpo:v:87:y:2025:i:c:p:38-56
    DOI: 10.1016/j.eap.2025.05.025
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

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