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Brain Drain, R&D-Cost Differentials and the Innovation Gap


  • Fabio MARIANI

    (Paris School of Economics, Université Paris 1)


This paper aims at explaining why countries with comparable levels of education still experience notable differences in terms of R&D and innovation. High skilled migration, ultimately linked to differences in R&D costs, might be responsible for the persitence of such a gap. In fact, in a model where human capital accumulation and innovation are strategic complements, we show that allowing labor outflows may strenghthen educational incentives in the lagging economy if migration is probabilistic in nature, but at the same time reduces the share of innovative production. Income (growth) might be consequently affected, and a positive migration chance is very unlikely to act as a substitute for educational subsidies.

Suggested Citation

  • Fabio MARIANI, 2008. "Brain Drain, R&D-Cost Differentials and the Innovation Gap," Discussion Papers (REL - Recherches Economiques de Louvain) 2008031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:2008031

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    References listed on IDEAS

    1. Docquier, Frédéric & Faye, Ousmane & Pestieau, Pierre, 2008. "Is migration a good substitute for education subsidies?," Journal of Development Economics, Elsevier, vol. 86(2), pages 263-276, June.
    2. Benoît Mulkay & Bronwyn H, Hall & Jacques Mairesse, 2000. "Firm Level Investment and R&D in France and the United States : A Comparison," Working Papers 2000-49, Center for Research in Economics and Statistics.
    3. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
    4. 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.
    5. Janeba, Eckhard, 1998. "Tax competition in imperfectly competitive markets," Journal of International Economics, Elsevier, vol. 44(1), pages 135-153, February.
    6. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October.
    7. Acemoglu, Daron, 1994. "Search in the Labour Market, Incomplete Contracts and Growth," CEPR Discussion Papers 1026, C.E.P.R. Discussion Papers.
    8. Guido Cozzi, 2003. "The Self-fulfilling International Allocation of Innovation," Levine's Bibliography 666156000000000189, UCLA Department of Economics.
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    More about this item


    Education; Brain Drain;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • I2 - Health, Education, and Welfare - - Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity


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