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Endogenous Skill Formation and the Source Country Effects of Skilled Labor Emigration from Developing Countries

Author

Listed:
  • Egger, Hartmut
  • Felbermayr, Gabriel

Abstract

In this paper we set up a simple theoretical framework to study thepossible source country effects of skilled labor emigration fromdeveloping countries. We show that for given technologies, labor marketintegration necessarily lowers GDP per capita in a poor source countryof emigration, because it distorts the education decision ofindividuals. As pointed out by our analysis, a negative source countryeffect also materializes if all agents face identical emigrationprobabilities, irrespective of their education levels. This is in sharpcontrast to the case of exogenous skill supply. Allowing for humancapital spillovers, we further show that with social returns toschooling there may be a counteracting positive source country effect ifthe prospect of emigration stimulates the incentives to acquireeducation. Since, in general, the source country effects are not clear,we calibrate our model for four major source countries - Mexico, Turkey,Morocco, and the Philippines - and show that an increase in emigrationrates beyond those observed in the year 2000 is very likely to lower GDPper capita in poor economies.

Suggested Citation

  • Egger, Hartmut & Felbermayr, Gabriel, 2009. "Endogenous Skill Formation and the Source Country Effects of Skilled Labor Emigration from Developing Countries," Munich Reprints in Economics 20530, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20530
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    Cited by:

    1. Matteo Gomellini & Cormac Ó Gráda, 2019. "Brain Drain and Brain Gain in Italy and Ireland in the Age of Mass Migration," Palgrave Studies in Economic History, in: David Mitch & Gabriele Cappelli (ed.), Globalization and the Rise of Mass Education, chapter 0, pages 163-191, Palgrave Macmillan.
    2. Francesco Giffoni & Matteo Gomellini, 2015. "Brain Gain in the Age of Mass Migration," Quaderni di storia economica (Economic History Working Papers) 34, Bank of Italy, Economic Research and International Relations Area.
    3. Bertoli Simone & Brücker Herbert, 2011. "Extending the Case for a Beneficial Brain Drain," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(4), pages 466-478, August.
    4. Armando J. Garcia Pires, 2015. "Brain Drain And Brain Waste," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(1), pages 1-34, March.

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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