Addition through Depletion: The Brain Drain as a Catalyst of Human Capital Formation and Economic Betterment
Enabling educated individuals to work abroad entails a brain drain and results in educated unemployment at home. Because the prospect of migration raises the expected returns to higher education it also facilitates a "brain gain": a eveloping economy ends up with a higher fraction of educated individuals. Due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation of migration policy pursued in both the current period and the preceding period can greatly facilitate the "take-off" of a developing economy in the current period. Thus we identify a new policy tool that could yield an improvement in the well-being of the population of a developing economy: a controlled migration of educated workers.
|Date of creation:||04 Jun 2003|
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