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Effective Cost of Brain Drain


  • Bouoiyour, Jamal
  • Jellal, Mohamed
  • Wollf, François-Charles


In developing countries, remittances and intra-family private transfers sent by household members who migrate to more developed countries constitute a fundamental source of income and capital accumulation. Then, it is important to understand the motives of migrants who decide to remit back to their families. Drawing on the theory of labor migration under asymmetric information, we show that low-skilled workers are expected to provide higher amounts of remittances when remittances are motivated by self-interest. This transfer paradox is explained as follows. Since low skilled workers are likely to return home when informational symmetry is restored, the optimal remittance level is a decreasing function of the migrant's skill level since remittances may be seen as an implicit insurance, whose benefits are received only under migration return.

Suggested Citation

  • Bouoiyour, Jamal & Jellal, Mohamed & Wollf, François-Charles, 2003. "Effective Cost of Brain Drain," MPRA Paper 29176, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:29176

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    References listed on IDEAS

    1. Miyagiwa, Kaz, 1991. "Scale Economies in Education and the Brain Drain Problem," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 743-759, August.
    2. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
    3. Nadeem U. Haque & Se-Jik Kim, 1995. "“Human Capital Flight”: Impact of Migration on Income and Growth," IMF Staff Papers, Palgrave Macmillan, vol. 42(3), pages 577-607, September.
    4. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-918, October.
    5. Cox, Donald & Jimenez, Emmanuel, 1990. "Achieving Social Objectives through Private Transfers: A Review," World Bank Research Observer, World Bank Group, vol. 5(2), pages 205-218, July.
    6. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
    7. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
    8. Hoddinott, John, 1994. "A Model of Migration and Remittances Applied to Western Kenya," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 459-476, July.
    9. Hillel Rapoport & Frederic Docquier, 1998. "Are migrant minorities strategically self-selected?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(4), pages 579-588.
    10. Frédéric Docquier & Hillel Rapoport, 2000. "Strategic and Altruistic Remittances," ULB Institutional Repository 2013/229586, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. Farid MAKHLOUF & Adil NAAMANE, 2013. "The Impact of Remittances on Economic Growth: The Evidence from Morocco," Working Papers 2013-2014_3, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Sep 2013.
    2. Driouchi, Ahmed & Boboc, Cristina & Zouag, Nada, 2009. "Emigration of Highly Skilled Labor: Determinants & Impacts," MPRA Paper 21567, University Library of Munich, Germany, revised 23 Mar 2010.
    3. Peter Schaeffer, 2005. "Human capital, migration strategy, and brain drain," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(3), pages 319-335.
    4. Jellal, Mohamed, 2014. "Diaspora famille transferts et contrat implicite
      [Diaspora famille and transfers as implicit cintract]
      ," MPRA Paper 57387, University Library of Munich, Germany.

    More about this item


    Remittances; asymmetric information; migration;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design


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