Gain with a Drain? Evidence from Rural Mexico on the New Economics of the Brain Drain

Evidence is presented in support of the “brain gain” view that the likelihood of migrating to a destination wherein the returns to human capital (schooling) are high creates incentives to acquire human capital in migrant-sending areas. In Mexico, even though internal migrants are more educated than those who stay behind, the average level of schooling in the migrant-sending villages increases with internal migration. This finding is consistent with the hypothesis that the dynamic investment effects reverse the static, depletion effects of migration on schooling. Households’ access to high-skill internal migration networks significantly increases the likelihood that children will attend school beyond the compulsory level. Access to low-skill internal networks has the opposite effect. By contrast with internal migration, migration from rural Mexico to the U.S. does not select positively on schooling, nor does it significantly influence human capital formation, even though remittances from Mexican migrants in the U.S. far outweigh remittances from internal migrants.