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A two-country model of high skill migration with public education

This paper proposes a two-country model of migration in a transferable skill sector, where workers'education is provided free of charge by governments. We study firstly the non-cooperative equilibrium where the poor country decides on the education level and the rich country decides on the quota of skilled migrants. Additional migration raises earnings prospects in the source country and attracts more talented people to that profession, what we refer to as the sector-specific brain gain effect. This game presents a single stable equilibrium with positive migration. Compared to the cooperative equilibrium, in the noncooperative equilibrium the poor country systematically under-invests in education. Whether migration is too strong or too weak depends on the size of the brain gain effect. Furthermore, the size of the welfare gain to be reaped by moving from non-cooperative to the cooperative organization of migration also depends on the strength of the sector-specific brain gain.

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File URL: http://hal-essec.archives-ouvertes.fr/docs/00/77/97/16/PDF/WP1301.pdf
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Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number WP1301.

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Length: 30 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:ebg:essewp:dr-13001
Contact details of provider: Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
Web page: http://www.essec.edu/
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  1. McKenzie, David & Gibson, John & Stillman, Steven, 2006. "How Important Is Selection? Experimental vs. Non-Experimental Measures of the Income Gains from Migration," IZA Discussion Papers 2087, Institute for the Study of Labor (IZA).
  2. Gibson, John & McKenzie, David, 2009. "The Microeconomic Determinants of Emigration and Return Migration of the Best and Brightest: Evidence from the Pacific," IZA Discussion Papers 3926, Institute for the Study of Labor (IZA).
  3. Michel, BEINE & Frédéric, DOCQUIER & Hillel, RAPOPORT, 2006. "Brain drain and human capital formation in developing countries : winners and losers," Discussion Papers (ECON - Département des Sciences Economiques) 2006023, Université catholique de Louvain, Département des Sciences Economiques.
  4. DOCQUIER, Frédéric & FAYE, Ousmane & PESTIEAU, Pierre, . "Is migration a good substitute for education subsidies?," CORE Discussion Papers RP -2022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Panu Poutvaara, 2008. "Public and Private Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(3), pages 591-608, 09.
  6. Batista, Catia & Lacuesta, Aitor & Vicente, Pedro C., 2010. "Testing the 'Brain Gain' Hypothesis: Micro Evidence from Cape Verde," IZA Discussion Papers 5048, Institute for the Study of Labor (IZA).
  7. Frederic, DOCQUIER & Olivier, LOHEST & Abdeslam, MARFOUK, 2007. "Brain drain in developing countries," Discussion Papers (ECON - Département des Sciences Economiques) 2007004, Université catholique de Louvain, Département des Sciences Economiques.
  8. Oded Stark & Christian Helmenstein & Alexia Prskawetz, 1998. "Human Capital Depletion, Human Capital Formation, and Migration: A Blessing in a "Curse"?," Departmental Working Papers _096, Chinese University of Hong Kong, Department of Economics.
  9. Djajić, Slobodan & Michael, Michael S. & Vinogradova, Alexandra, 2012. "Migration of skilled workers: Policy interaction between host and source countries," Journal of Public Economics, Elsevier, vol. 96(11), pages 1015-1024.
  10. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
  11. Daniel Chiquiar & Gordon H. Hanson, 2002. "International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States," NBER Working Papers 9242, National Bureau of Economic Research, Inc.
  12. Belot, Michèle & Hatton, Timothy J., 2008. "Immigrant Selection in The OECD," CEPR Discussion Papers 6675, C.E.P.R. Discussion Papers.
  13. Patricia Cortés & Jessica Pan, 2012. "Relative Quality of Foreign Nurses in the United States," CReAM Discussion Paper Series 1231, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  14. Satish Chand & Michael A. Clemens, 2008. "Skilled emigration and skill creation: A quasi-experiment," International and Development Economics Working Papers idec08-05, International and Development Economics.
  15. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  16. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-53, September.
  17. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
  18. Beine, Michel & Docquier, Frédéric & Oden-Defoort, Cecily, 2011. "A Panel Data Analysis of the Brain Gain," World Development, Elsevier, vol. 39(4), pages 523-532, April.
  19. Frédéric Docquier & B. Lindsay Lowell & Abdeslam Marfouk, 2009. "A Gendered Assessment of Highly Skilled Emigration," Population and Development Review, The Population Council, Inc., vol. 35(2), pages 297-321.
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