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Do Brain Drain and Poverty Result from Coordination Failures?

  • David de la Croix

    ()

    (IRES and CORE, Universite catholique de Louvain)

  • Frederic Docquier

    ()

    (National Fund for Scientific Research (Belgium) and IRES, Universite catholique de Louvain)

We explore the complementarities between high-skill emigration and poverty in developing countries. We build a model endogenizing human-capital accumulation, high-skill migration and productivity. Two countries sharing the same characteristics may end up either in a "low poverty/low brain drain" path or in a "high poverty/high brain drain" path. After identifying country-specific parameters, we find that, for a majority of countries, the observed equilibrium has higher income than the other possible one. In 22 developing countries (including 20 small states with less than 2 million inhabitants), poverty and high brain drain are worsened by a coordination failure. For 25 other countries, a radical worsening of economic performances is feasible. These results are fairly robust to identification assumptions and the inclusion of a brain-gain mechanism.

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Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 1009.

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Date of creation: May 2010
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Handle: RePEc:crm:wpaper:1009
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