Can a host country increase human capital by accepting study migrants?

This study investigates whether the study migrants’ host country can increase their average human capital by improving the quality of study migrants or increasing their numbers. This study utilises a mathematical model and solves maximisation problems. Many countries face brain drain, and labour migrants’ acceptance policies alone are insufficient to raise domestic human capital. Some countries introduce study migrants’ acceptance policies assuming that the host country’s domestic human capital increases if study migrants are more innately able and their number is larger. However, this study finds that even if the quality of the study migrants improves via the quality policy or even if their number increases due to the quantity policy, the host country does not necessarily increase its average human capital. In particular, to enhance domestic average human capital, the host country must distinguish between quality and quantity policies, observing whether migrants are likely employed and whether the migrants’ employment probability changes responsively to relative human capital. This study contributes to the migration literature by addressing the following respects: First, it demonstrates the concrete relationship between domestic human capital and study migrants’ human capital formation by solving an overlapping-generations model. Second, it shows that increasing the quality and quantity of study migrants are not always effective in raising domestic human capital. Third, it identifies the appropriate situation for the quality policy and the appropriate situation for the quantity policy.