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Should I stay or should I go? An institutional approach to brain drain


  • Lea Cassar
  • Bruno S. Frey


This paper suggests that institutional factors which reward social net- works at the expenses of productivity can play an important role in ex- plaining brain drain. The e€ects of social networks on brain drain are analyzed in a decision theory framework with asymmetric information. We distinguish between the role of insidership and personal connections. The larger the cost of being an outsider, the smaller is the number and the average ability of researchers working in the domestic job market. Per- sonal connections partly compensate for this e€ect by attracting highly connected researchers back. However, starting from a world with no dis- tortions, personal connections also increase brain drain.

Suggested Citation

  • Lea Cassar & Bruno S. Frey, 2010. "Should I stay or should I go? An institutional approach to brain drain," CREMA Working Paper Series 2010-12, Center for Research in Economics, Management and the Arts (CREMA).
  • Handle: RePEc:cra:wpaper:2010-12

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    References listed on IDEAS

    1. Paul Winters & Alain de Janvry & Elisabeth Sadoulet, 2001. "Family and Community Networks in Mexico-U.S. Migration," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 159-184.
    2. Kwok, Peter & Leland, Hayne, 1984. "Migration and Asymmetric Information: Reply," American Economic Review, American Economic Association, vol. 74(3), pages 535-535, June.
    3. Kwok, Viem & Leland, Hayne, 1982. "An Economic Model of the Brain Drain," American Economic Review, American Economic Association, vol. 72(1), pages 91-100, March.
    4. P. Giannoccolo, 2005. "Brain Drain Competition Policies in Europe: a Survey," Working Papers 534, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Katz, Eliakim & Stark, Oded, 1984. "Migration and Asymmetric Information: Comment," American Economic Review, American Economic Association, vol. 74(3), pages 533-534, June.
    6. Lien, Da-Hsiang Donald, 1987. "Economic analysis of brain drain," Journal of Development Economics, Elsevier, vol. 25(1), pages 33-43, February.
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    More about this item


    Brain Drain; Social Networks; Institutions; Asymmetric In- formation; Italian Academia;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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