The migration–inequality debate: a reassessment through rent-seeking theory

According to the Roy–Borjas model, the most talented workers will choose to migrate to countries exhibiting high income inequalities to achieve the highest earnings. The purpose of this article is to highlight that income inequalities in the country of origin, particularly the nature of inequalities, will affect high-skilled emigration. If the home country rewards productive efforts and sanctions unproductive behaviours (such as rent-seeking), emigration declines. We test this hypothesis by relying on panel data of 30 OECD countries for the period from 1990 to 2010. Two econometric techniques are used: the ordinary least squares and the system-Generalized Method of Moments estimation to tackle the endogeneity issue. The results show that when income inequalities in the home country are conditioned by the institutions' quality, there is a negative relationship between inequalities and high-skilled emigration, suggesting that productive inequalities are detrimental to emigration. Thus, developed countries facing high-skilled emigration must change the nature of inequalities by reforming their institutions in order to attract and retain the most talented workers. Implementing institutions that reward productive efforts would limit high-skilled emigration.