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International Mobility of the Highly Skilled, Endogenous R&D, and Public Infrastructure Investment

  • Grossmann, Volker

    ()

    (University of Fribourg)

  • Stadelmann, David

    ()

    (University of Bayreuth)

This paper theoretically and empirically analyzes the interaction of emigration of highly skilled labor, an economy’s income gap to potential host economies of expatriates, and optimal public infrastructure investment. In a model with endogenous education and R&D investment decisions we show that international integration of the market for skilled labor aggravates between-country income inequality by harming those which are source economies to begin with while benefiting host economies. When brain drain increases in source economies, public infrastructure investment is optimally adjusted downward, whereas host economies increase it. Evidence from 77 countries well supports our theoretical hypotheses.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3366.

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Length: 46 pages
Date of creation: Feb 2008
Date of revision:
Publication status: published as 'Does International Mobility of High-Skilled Workers Aggravate Between-Country Inequality?' in: Journal of Development Economics, 2011, 95 (1), 88 - 94
Handle: RePEc:iza:izadps:dp3366
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  8. Hartmut Egger & Josef Falkinger & Volker Grossmann, 2012. "Brain Drain, Fiscal Competition, and Public Education Expenditure," Review of International Economics, Wiley Blackwell, vol. 20(1), pages 81-94, 02.
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  10. Miyagiwa, K., 1989. "Scale Economics In Education And The Brain Drain Problem," Working Papers 89-09, University of Washington, Department of Economics.
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  14. Michel Beine & Frédéric Docquier & Hillel Rapoport, 2001. "Brain drain and economic growth: theory and evidence," ULB Institutional Repository 2013/10449, ULB -- Universite Libre de Bruxelles.
  15. Michel Beine & Frédéric Docquier & Hillel Rapoport, . "Brain drain and human capital formation in developing countries: winners and losers?," ULB Institutional Repository 2013/10415, ULB -- Universite Libre de Bruxelles.
  16. Saint-Paul, Gilles, 2004. "The Brain Drain: Some Evidence from European Expatriates in the United States," IZA Discussion Papers 1310, Institute for the Study of Labor (IZA).
  17. Laudeline Auriol, 2007. "Labour Market Characteristics and International Mobility of Doctorate Holders: Results for Seven Countries," OECD Science, Technology and Industry Working Papers 2007/2, OECD Publishing.
  18. Jean-Christophe Dumont & Georges Lemaître, 2005. "Counting Immigrants and Expatriates in OECD Countries: A New Perspective," OECD Social, Employment and Migration Working Papers 25, OECD Publishing.
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  21. David E. Wildasin, 2005. "Fiscal Competition," Working Papers 2005-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
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