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Skill-biased technological change, unemployment and brain drain

  • Harald Fadinger

    ()

    (University of Vienna)

  • Karin Mayr

    ()

    (University of Vienna)

We develop a general equilibrium model of technological change and migration to examine the effects of a change in skill endowments on wages, employment rates and emigration rates of skilled and unskilled workers. We find that, depending on the elasticity of substitution between skilled and unskilled workers, an increase in the skill ratio can increase the expected wage of the skilled and decrease the brain drain. We provide empirical estimates and simulations to support our findings and show that effects are empirically relevant and potentially sizeable. Our findings fit the stylized facts on educational upgrading in developing countries during the 1980s and the subsequent decrease in the brain drain from those countries during the 1990s.

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Paper provided by Norface Research Programme on Migration, Department of Economics, University College London in its series Norface Discussion Paper Series with number 2012011.

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Date of creation: Jan 2012
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Handle: RePEc:nor:wpaper:2012011
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