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Education, redistribution and the threat of brain drain

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  • Alexander Haupt

    ()

  • Eckhard Janeba

    ()

Abstract

This paper analyzes the relationship between brain drain, human capital accumulation and individual net incomes in the presence of a redistributional tax policy, credit market constraints, administrative costs of tax collection, and lack of government commitment. We characterize how decreasing migration costs for skilled workers affect the time-consistent policies of a government that wants to shift resources from skilled to unskilled workers. In our main result we show that a decline in migration costs is Pareto improving when migration costs are high, but have ambiguous effects when these costs are low. Moreover, mobility costs and human capital accumulation are positively correlated.
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Suggested Citation

  • Alexander Haupt & Eckhard Janeba, 2009. "Education, redistribution and the threat of brain drain," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(1), pages 1-24, February.
  • Handle: RePEc:kap:itaxpf:v:16:y:2009:i:1:p:1-24
    DOI: 10.1007/s10797-007-9054-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Brain drain; Human capital; Redistribution; Time-consistent policy; Credit market imperfections; F22; H2; I2;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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