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Education, redistribution and the threat of brain drain

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  • Alexander Haupt

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  • Eckhard Janeba

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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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    Cited by:

    1. Poutvaara, Panu, 2011. "The expansion of higher education and time-consistent taxation," European Journal of Political Economy, Elsevier, vol. 27(2), pages 257-267, June.
    2. Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2014. "Financing Higher Education in a Mobile World," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(3), pages 343-371, June.
    3. Silke Uebelmesser & Marcel Gérard, 2014. "Financing Higher Education when Students and Graduates are Internationally Mobile," Jena Economic Research Papers 2014-009, Friedrich-Schiller-University Jena.
    4. Alexander Kemnitz, 2009. "Native welfare losses from high skilled immigration," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 560-570, August.
    5. McAusland, Carol & Kuhn, Peter, 2011. "Bidding for brains: Intellectual property rights and the international migration of knowledge workers," Journal of Development Economics, Elsevier, vol. 95(1), pages 77-87, May.
    6. Panu Poutvaara, 2008. "Public and Private Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(3), pages 591-608, September.
    7. Thushyanthan Baskaran & Zohal Hessami, 2010. "Globalization and the Composition of Public Education Expenditures: A Dynamic Panel Analysis," Working Paper Series of the Department of Economics, University of Konstanz 2010-03, Department of Economics, University of Konstanz.
    8. Alexander Haupt & Tim Krieger & Thomas Lange, 2010. "A Note on Brain Gain and Brain Drain: Permanent Migration and Education Policy," Working Papers CIE 27, Paderborn University, CIE Center for International Economics.
    9. Panu Poutvaara, 2004. "Public Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," CESifo Working Paper Series 1369, CESifo Group Munich.
    10. Kuhn, Peter J. & McAusland, Carol, 2006. "The International Migration of Knowledge Workers: When Is Brain Drain Beneficial?," IZA Discussion Papers 2493, Institute for the Study of Labor (IZA).
    11. Grossmann, Volker & Stadelmann, David, 2008. "International Mobility of the Highly Skilled, Endogenous R&D, and Public Infrastructure Investment," IZA Discussion Papers 3366, Institute for the Study of Labor (IZA).
    12. Kuhn, Peter J. & McAusland, Carol, 2008. "Consumers and the Brain Drain: Product Design and the Gains from Emigration," IZA Discussion Papers 3602, Institute for the Study of Labor (IZA).
    13. Kuhn, Peter & McAusland, Carol, 2009. "Consumers and the brain drain: Product and process design and the gains from emigration," Journal of International Economics, Elsevier, vol. 78(2), pages 287-291, July.
    14. Alexander Haupt & Silke Übelmesser, 2009. "Voting on Labour-Market Integration and Education Policy when Citizens Differ in Mobility and Ability," CESifo Working Paper Series 2588, CESifo Group Munich.
    15. Hartmut Egger & Josef Falkinger & Volker Grossmann, 2012. "Brain Drain, Fiscal Competition, and Public Education Expenditure," Review of International Economics, Wiley Blackwell, vol. 20(1), pages 81-94, February.
    16. Tim Krieger & Thomas Lange, 2010. "Education policy and tax competition with imperfect student and labor mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(6), pages 587-606, December.
    17. Haupt, Alexander, 2012. "The evolution of public spending on higher education in a democracy," European Journal of Political Economy, Elsevier, vol. 28(4), pages 557-573.
    18. Delpierre, Matthieu & Verheyden, Bertrand, 2014. "Student and worker mobility under university and government competition," Journal of Public Economics, Elsevier, vol. 110(C), pages 26-41.
    19. Thomas Lange, 2008. "Local Public Funding of Higher Education when Students and Skilled Workers are Mobile," Working Papers CIE 11, Paderborn University, CIE Center for International Economics.
    20. Wilson, John Douglas, 2011. "Brain-drain taxes for non-benevolent governments," Journal of Development Economics, Elsevier, vol. 95(1), pages 68-76, May.
    21. Thushyanthan Baskaran & Zohal Hessami, 2011. "Public Education Spending in a Globalized World: Is there a Shift in Priorities Across Educational Stages?," Working Paper Series of the Department of Economics, University of Konstanz 2011-42, Department of Economics, University of Konstanz.
    22. Thushyanthan Baskaran & Zohal Hessami, 2010. "Globalization, Redistribution, and the Composition of Public Education Expenditures," CESifo Working Paper Series 2917, CESifo Group Munich.

    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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