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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 Fribourg)

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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  17. Saint-Paul, Gilles, 2004. "The Brain Drain: Some Evidence from European Expatriates in the United States," IDEI Working Papers 307, Institut d'Économie Industrielle (IDEI), Toulouse.
  18. 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.
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  20. David E. Wildasin, 2005. "Fiscal Competition," Working Papers 2005-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
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