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Sustainability of the Romanian Social Security System. The Burden of Education

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  • Oprean, Victor-Bogdan
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    Sustainability of the Social Security Systems is dependant on a large variety of factors of which, directly connected with the general economic growth, the human capital proved to have a decisive and direct influence. Internationally synchronized Education should, in this context, normally be the engine behind the social security system’s vehicle. In the conditions of the international mobility of the labor forces, there is a complex set of incentives to provide an international applicability of a given type of education. However, there is a specific cost of providing such education for the countries that face an education outsourcing. In such a scenario, education may show more attributes of breaks instead of an engine pushing forward the system as a whole, giving new perspectives to the “brain-drain brain-gain” conundrum. In the conditions of the international mobility of the labor forces, there is a complex set of incentives to provide an international applicability of a given type of education. But there is a specific cost of providing such education for the countries that face an education outsourcing. The objective of this study is to provide an assessment of such cost for an emerging economy like the Romanian one. We are adopting a modified version of the analytical framework proposed by Poutvaara (2005). This framework describes the link between public education and migration, and can be used to test the migration incentives from Romania to EU15 countries. Further, we estimate the loss of Romanian economy as a result of such a process using a dataset for a 7 year period prior and post- Romanian accession to EU in 2007. Our results suggest that the case of Romanian emigration falls within the frame model’s variant of an asymmetric federation. Since the primary and secondary education has no particular country specific orientation and the tertiary public education is organized according to Bologna provisions and requirements, the education provided by the Romanian public system can be considered as being internationally applicable with respect to EU15 countries. The cost of emigration is estimated as a function of public education expenses, wage taxes and the taxes on final consumption per capita not recovered from or lost due to emigration. An interpretation of the figures is provided and further research directions are suggested. The outcome of the proposed analysis can serve to a better-structured design of the public policies for education considering the societal characteristics of Romania in the context of European Union integration.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41432.

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    Date of creation: 19 Sep 2012
    Handle: RePEc:pra:mprapa:41432
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    1. 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.
    2. Michel, BEINE & Frédéric, DOCQUIER & Hillel, RAPOPORT, 2006. "Brain drain and human capital formation in developing countries : winners and losers," Discussion Papers (ECON - Département des Sciences Economiques) 2006023, Université catholique de Louvain, Département des Sciences Economiques.
    3. Poutvaara, Panu, 2006. "Public Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," IZA Discussion Papers 2478, Institute for the Study of Labor (IZA).
    4. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, vol. 1(1), pages 19-42, April.
    5. Poutvaara, Panu, 2008. "Public and private education in an integrated Europe: Studying to migrate and teaching to stay?," Munich Reprints in Economics 19802, University of Munich, Department of Economics.
    6. Niimi, Yoko & Ozden, Caglar & Schiff, Maurice, 2008. "Remittances and the Brain Drain: Skilled Migrants Do Remit Less," IZA Discussion Papers 3393, Institute for the Study of Labor (IZA).
    7. Bhagwati, Jagdish N. & Hamada, Koichi, 1982. "Tax policy in the presence of emigration," Journal of Public Economics, Elsevier, vol. 18(3), pages 291-317, August.
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