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Brain drain and Brain Return: Theory and Application to Eastern-Western Europe

Recent empirical evidence seems to show that temporary migration is a widespread phenomenon, especially among highly skilled workers who return to their countries of origin when these begin to grow. This paper develops a simple, tractable overlapping generations model that provides a rationale for return migration and predicts who will migrate and who returns among agents with heterogeneous abilities. The model also incorporates the interaction between the migration decision and schooling: the possibility of migrating, albeit temporarily, to a country with high returns to skills produces positive schooling incentive e ects. We use parameter values from the literature and data on return migration to simulate the model for the Eastern-Western European case. We then quantify the e ects that increased openness (to migrants) would have on human capital and wages in Eastern Europe. We nd that, for plausible values of the parameters, the possibility of return migration combined with the education incentive channel reverses the brain drain into a signi cant brain gain for Eastern Europe.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0907.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0907.

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Date of creation: May 2009
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Handle: RePEc:vie:viennp:0907
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  1. Iranzo, Susana & Peri, Giovanni, 2009. "Migration and trade: Theory with an application to the Eastern-Western European integration," Journal of International Economics, Elsevier, vol. 79(1), pages 1-19, September.
  2. Michel Beine & Frédéric Docquier & Hillel Rapoport, . "Brain drain and human capital formation in developing countries: winners and losers?," ULB Institutional Repository 2013/10415, ULB -- Universite Libre de Bruxelles.
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  4. Sebastian Gundel & Heiko Peters, 2008. "What determines the duration of stay of immigrants in Germany?: Evidence from a longitudinal duration analysis," International Journal of Social Economics, Emerald Group Publishing, vol. 35(11), pages 769-782, October.
  5. 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.
  6. Simon Commander & Rupa Chanda & Mari Kangasniemi & L. Alan Winters, 2008. "The Consequences of Globalisation: India's Software Industry and Cross-border Labour Mobility -super-1," The World Economy, Wiley Blackwell, vol. 31(2), pages 187-211, 02.
  7. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
  8. 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.
  9. McCormick, Barry & Wahba, Jackline, 2001. "Overseas Work Experience, Savings and Entrepreneurship amongst Return Migrants to LDCs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 164-78, May.
  10. Christian Dustmann & Yoram Weiss, 2007. "Return Migration: Theory and Empirical Evidence from the UK," British Journal of Industrial Relations, London School of Economics, vol. 45(2), pages 236-256, 06.
  11. J. N. Bhagwati & C. Rodriguez, 1975. "Welfare-Theoretical Analysis of the Brain Drain," Working papers 158, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
  13. Catia Batista & Pedro C. Vicente, 2007. "Brain Drain or Brain Gain?Micro Evidence from an African Success Story," Economics Series Working Papers 343, University of Oxford, Department of Economics.
  14. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  15. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October.
  16. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
  17. Alan Barrett & Philip J. O'Connell, 2000. "Is there a Wage Premium for Returning Irish Migrants?," Papers WP125, Economic and Social Research Institute (ESRI).
  18. Schiff, Maurice, 2005. "Brain gain : claims about its size and impact on welfare and growth are greatly exaggerated," Policy Research Working Paper Series 3708, The World Bank.
  19. George J. Borjas & Bernt Bratsberg, 1994. "Who Leaves? The Outmigration of the Foreign-Born," NBER Working Papers 4913, National Bureau of Economic Research, Inc.
  20. Anna Iara, 2006. "Skill Diffusion by Temporary Migration? Returns to Western European Working Experience in the EU Accession Countries," Development Working Papers 210, Centro Studi Luca d'Agliano, University of Milano.
  21. Grogger, Jeffrey & Hanson, Gordon H., 2011. "Income maximization and the selection and sorting of international migrants," Journal of Development Economics, Elsevier, vol. 95(1), pages 42-57, May.
  22. Chau, Nancy H & Stark, Oded, 1999. "Migration under Asymmetric Information and Human Capital Formation," Review of International Economics, Wiley Blackwell, vol. 7(3), pages 455-83, August.
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