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Firms Left Behind: Emigration and Firm Productivity

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  • Yvonne Giesing

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  • Nadzeya Laurentsyeva

Abstract

This paper establishes a causal link between the emigration of skilled workers and firm performance in source countries. Using firm-level panel data from ten Eastern European countries, we show that the emigration of skilled workers lowers firm total factor productivity. We exploit time, country, and industry differences in the opening of EU labor markets from 2004 to 2014 as a source of exogenous variation in the emigration rates from new EU member states. We argue that a potential channel behind this effect relates to the reduction in firm-specific human capital due to a higher worker turnover.

Suggested Citation

  • Yvonne Giesing & Nadzeya Laurentsyeva, 2017. "Firms Left Behind: Emigration and Firm Productivity," CESifo Working Paper Series 6815, CESifo.
  • Handle: RePEc:ces:ceswps:_6815
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6815.pdf
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    References listed on IDEAS

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    1. Martin Kahanec, 2013. "Labor mobility in an enlarged European Union," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 7, pages 137-152, Edward Elgar Publishing.
    2. Volker Grossmann & David Stadelmann, 2013. "Wage Effects of High-Skilled Migration: International Evidence," World Bank Economic Review, World Bank Group, vol. 27(2), pages 297-319.
    3. Frédéric Docquier & Hillel Rapoport, 2012. "Globalization, Brain Drain, and Development," Journal of Economic Literature, American Economic Association, vol. 50(3), pages 681-730, September.
    4. Michael A. Clemens, 2013. "Why Do Programmers Earn More in Houston Than Hyderabad? Evidence from Randomized Processing of US Visas," American Economic Review, American Economic Association, vol. 103(3), pages 198-202, May.
    5. Christian Dustmann & Tommaso Frattini & Anna Rosso, 2015. "The Effect of Emigration from Poland on Polish Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(2), pages 522-564, April.
    6. Yuriy Gorodnichenko & Monika Schnitzer, 2013. "Financial Constraints And Innovation: Why Poor Countries Don'T Catch Up," Journal of the European Economic Association, European Economic Association, vol. 11(5), pages 1115-1152, October.
    7. Kahanec, Martin & Pytlikova, Mariola & Zimmermann, Klaus F., 2014. "The Free Movement of Workers in an Enlarged European Union: Institutional Underpinnings of Economic Adjustment," IZA Discussion Papers 8456, Institute of Labor Economics (IZA).
    8. Grossmann, Volker & Stadelmann, David, 2011. "Does international mobility of high-skilled workers aggravate between-country inequality?," Journal of Development Economics, Elsevier, vol. 95(1), pages 88-94, May.
    9. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
    10. Braunerhjelm, Pontus & Ding, Ding & Thulin, Per, 2015. "Does Labour Mobility Foster Innovation? Evidence from Sweden," Working Paper Series in Economics and Institutions of Innovation 403, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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    Cited by:

    1. Massimo Anelli & Gætano Basso & Giuseppe Ippedico & Giovanni Peri, 2020. "Does Emigration Drain Entrepreneurs?," CESifo Working Paper Series 8388, CESifo.
    2. Annamaria Nifo & Domenico Scalera & Gaetano Vecchione, 2020. "Does skilled migration reduce investment in human capital? An investigation on educational choices in Italian regions (2001–2016)," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 781-802, November.
    3. Massimo Anelli & Gaetano Basso & Giuseppe Ippedico & Giovanni Peri, 2019. "Youth Drain, Entrepreneurship and Innovation," NBER Working Papers 26055, National Bureau of Economic Research, Inc.
    4. Fackler, Thomas A. & Giesing, Yvonne & Laurentsyeva, Nadzeya, 2020. "Knowledge remittances: Does emigration foster innovation?," Research Policy, Elsevier, vol. 49(9).
    5. Yvonne Giesing & Felicitas Schikora, 2020. "Migrants' Missing Votes," CESifo Working Paper Series 8570, CESifo.

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    More about this item

    Keywords

    migration; firm productivity; human capital; EU enlargement;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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