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

Listed author(s):
  • 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
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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  18. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, vol. 1(1), pages 19-42, April.
  19. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
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