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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. Borjas, George J & Bratsberg, Bernt, 1996. "Who Leaves? The Outmigration of the Foreign-Born," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 165-76, February.
  2. Oded Stark & Christian Helmenstein & Alexia Prskawetz, 1998. "Human Capital Depletion, Human Capital Formation, and Migration: A Blessing in a "Curse"?," Departmental Working Papers _096, Chinese University of Hong Kong, Department of Economics.
  3. 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.
  4. 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.
  5. 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.
  6. Sebastian Gundel & Heiko Peters, 2008. "What Determines the Duration of Stay of Immigrants in Germany?: Evidence from a Longitudinal Duration Analysis," SOEPpapers on Multidisciplinary Panel Data Research 79, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Iranzo, Susana & Peri, Giovanni, 2009. "Migration and trade: Theory with an Application to the Eastern- Western European Integration," Working Papers 2072/42865, Universitat Rovira i Virgili, Department of Economics.
  8. 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.
  9. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
  10. 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.
  11. Michel Beine & Fréderic Docquier & Hillel Rapoport, 2008. "Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers," Economic Journal, Royal Economic Society, vol. 118(528), pages 631-652, 04.
  12. Caselli, Francesco & Coleman II, Wilbur John, 2000. "The World Technology Frontier," CEPR Discussion Papers 2584, C.E.P.R. Discussion Papers.
  13. Jeffrey Grogger & Gordon H. Hanson, 2008. "Income Maximization and the Selection and Sorting of International Migrants," NBER Working Papers 13821, National Bureau of Economic Research, Inc.
  14. Joseph E. Stiglitz, 1973. "The Theory of 'Screening', Education, and the Distribution of Income," Cowles Foundation Discussion Papers 354, Cowles Foundation for Research in Economics, Yale University.
  15. Schiff, Maurice, 2005. "Brain Gain: Claims about Its Size and Impact on Welfare and Growth Are Greatly Exaggerated," IZA Discussion Papers 1599, Institute for the Study of Labor (IZA).
  16. Alan Barrett & Philip J. O'Connell, 2000. "Is there a Wage Premium for Returning Irish Migrants?," Papers WP125, Economic and Social Research Institute (ESRI).
  17. 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.
  18. 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.
  19. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  20. 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.
  21. 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.
  22. Bhagwati, Jagdish & Rodriguez, Carlos, 1975. "Welfare-theoretical analyses of the brain drain," Journal of Development Economics, Elsevier, vol. 2(3), pages 195-221, September.
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