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The Lame Drain

  • Dong, Baomin
  • Fu, Shihe
  • Gong, Jiong
  • Fan, Hanwen

This paper develops a signaling theory where brain drain as well as the opposite of brain drain, a phenomenon we call “lame-drain” can result. In particular, we assume there are three types of agents according to their intrinsic abilities; education (with endogenous intensity) consists of two stages: undergraduate and graduate. There are two types of jobs: entry level and managerial. It is shown that under some circumstances the equilibrium is semi-pooling where the medium type chooses to work after undergraduate education while (a fraction of) both high and low types pursue graduate studies at home and abroad. Some high and low ability students return to work in the indigenous country in equilibrium. However, our model differs from the traditional brain drain models in that some low ability agents also go abroad in equilibrium and work in the host country after graduation, resulting in the recipient country hiring low ability agents, a phenomenon we call lame-drain. We then provide empirical evidence that lame-drain is indeed happening using U.S. Census data.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 53825.

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Date of creation: 14 Feb 2014
Date of revision:
Handle: RePEc:pra:mprapa:53825
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  1. Sanghoon Lee, 2007. "The Timing Of Signaling: To Study In High School Or In College?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 785-807, 08.
  2. Jeon, Doh-Shin & Menicucci, Domenico, 2008. "Money, fame and the allocation of talent: Brain drain and the institution of science," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 558-581, June.
  3. Michel Beine & Frédéric Docquier & Hillel Rapoport, 2001. "Brain drain and economic growth: theory and evidence," ULB Institutional Repository 2013/10449, ULB -- Universite Libre de Bruxelles.
  4. Stark, Oded & Fan, C. Simon, 2006. "International Migration and "Educated Unemployment"," Discussion Papers 7126, University of Bonn, Center for Development Research (ZEF).
  5. Hanming Fang, 2006. "Disentangling The College Wage Premium: Estimating A Model With Endogenous Education Choices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(4), pages 1151-1185, November.
  6. Jeroen M. Swinkels, 1997. "Education Signaling with Preemptive Offers," Discussion Papers 1175, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Stark, Oded & Fan, C. Simon, 2009. "A Theory of Migration as a Response to Occupational Stigma," Discussion Papers 55363, University of Bonn, Center for Development Research (ZEF).
  8. repec:wyi:journl:002155 is not listed on IDEAS
  9. K. Hamada & J. N. Bhagwati, 1975. "Domestic Distortions, Imperfect Information and the Brain Drain," Working papers 161, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Commander, Simon & Kangasniemi, Mari & Winters, L. Alan, 2003. "The Brain Drain: Curse or Boon?," IZA Discussion Papers 809, Institute for the Study of Labor (IZA).
  11. Katz, Eliakim & Stark, Oded, 1987. "International Migration under Asymmetric Information," Economic Journal, Royal Economic Society, vol. 97(387), pages 718-26, September.
  12. John Gibson & David McKenzie, 2011. "Eight Questions about Brain Drain," CReAM Discussion Paper Series 1111, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  13. Shihe Fu & Stephen L. Ross, 2013. "Wage Premia in Employment Clusters: How Important Is Worker Heterogeneity?," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 271 - 304.
  14. Pedro Ortín-Ángel & Vicente Salas-Fumás, 2007. "Compensation Dispersion Between and Within Hierarchical Levels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 53-79, 03.
  15. Lien, Da-Hsiang Donald, 1988. "Appropriate scientific research and brain drain : A simple model," Journal of Development Economics, Elsevier, vol. 29(1), pages 77-87, July.
  16. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  17. Hamada, Koichi & Bhagwati, Jagdish, 1975. "Domestic distortions, imperfect information and the brain drain," Journal of Development Economics, Elsevier, vol. 2(3), pages 265-279, September.
  18. Spence, Michael, 1976. "Competition in Salaries, Credentials, and Signaling Prerequisites for Jobs," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 51-74, February.
  19. Lien, Da-Hsiang Donald, 1987. "Asymmetric information and multi-stage brain drain," Economics Letters, Elsevier, vol. 23(3), pages 305-309.
  20. Rodriguez, Carlos Alfredo, 1975. "Brain drain and economic growth : A dynamic model," Journal of Development Economics, Elsevier, vol. 2(3), pages 223-247, September.
  21. Mattoo, Aaditya & Neagu, Ileana Cristina & Ozden, Caglar, 2005. "Brain waste? Educated immigrants in the U.S. labor market," Policy Research Working Paper Series 3581, The World Bank.
  22. Lien, Da-Hsiang Donald, 1987. "Economic analysis of brain drain," Journal of Development Economics, Elsevier, vol. 25(1), pages 33-43, February.
  23. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
  24. Donald Lien & Yan Wang, 2005. "Brain drain or brain gain: A revisit," Journal of Population Economics, Springer, vol. 18(1), pages 153-163, 07.
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