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Consumers and the Brain Drain: Product Design and the Gains from Emigration

Author

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  • Kuhn, Peter J.

    () (University of California, Santa Barbara)

  • McAusland, Carol

    () (University of British Columbia, Vancouver)

Abstract

We consider the welfare effects of skilled worker emigration in a context where skilled labor plays a role in product design. We show such emigration can benefit the residents left behind, even when consumers’ tastes exhibit a form of home bias. This is because emigration improves the design of goods designed by skilled emigrants but consumed in the sending country. In contrast to existing models of beneficial brain drain, our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration “lottery”. Instead, they are driven purely by differences in market size that induce skilled emigrants to design better products abroad than at home.

Suggested Citation

  • Kuhn, Peter J. & McAusland, Carol, 2008. "Consumers and the Brain Drain: Product Design and the Gains from Emigration," IZA Discussion Papers 3602, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3602
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    References listed on IDEAS

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    Cited by:

    1. McAusland, Carol & Kuhn, Peter, 2011. "Bidding for brains: Intellectual property rights and the international migration of knowledge workers," Journal of Development Economics, Elsevier, pages 77-87.
    2. Vasilakis, Chrysovalantis, 2013. "Globalized Market for Talents and Inequality: What Can Be Learnt from European Football?," The Warwick Economics Research Paper Series (TWERPS) 1034, University of Warwick, Department of Economics.

    More about this item

    Keywords

    product quality; international labor migration; brain drain;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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