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Skill-biased technological change, unemployment and brain drain

We develop a general equilibrium model of technological change and migration to examine the e ects of a change in skill endowments on wages, employment rates and emigration rates of skilled and unskilled workers. We nd that, depending on the elasticity of substitution between skilled and unskilled workers, an increase in the skill ratio can increase the expected wage of the skilled and decrease the brain drain. We provide empirical estimates and simulations to support our findings and show that e ects are empirically relevant and potentially sizeable. Our findings fit the stylized facts on educational upgrading in developing countries during the 1980s and the subsequent decrease in the brain drain from those countries during the 1990s.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie1108.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1108.

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Date of creation: Jun 2011
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Handle: RePEc:vie:viennp:1108
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  1. 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.
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  17. 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.
  18. Acemoglu, Daron & Zilibotti, Fabrizio, 2000. "Productivity Differences," CEPR Discussion Papers 2498, C.E.P.R. Discussion Papers.
  19. Docquier, Frédéric & Marchiori, Luca & Shen, I-Ling, 2010. "Brain drain in globalization: A general equilibrium analysis from the sending countries’ perspective," CEPR Discussion Papers 7682, C.E.P.R. Discussion Papers.
  20. Mathias Thoenig & Thierry Verdier, 2003. "A Theory of Defensive Skill-Biased Innovation and Globalization," American Economic Review, American Economic Association, vol. 93(3), pages 709-728, June.
  21. Epifani, Paolo & Gancia, Gino, 2002. "The Skill Bias of World Trade," Seminar Papers 707, Stockholm University, Institute for International Economic Studies.
  22. de la Fuente, Angel & Doménech, Rafael, 2002. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make? An Update and Further Results," CEPR Discussion Papers 3587, C.E.P.R. Discussion Papers.
  23. Simon Burgess & Helene Turon, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies – A Comment," Bristol Economics Discussion Papers 05/573, Department of Economics, University of Bristol, UK.
  24. Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal Innovation in the Theory of Growth and Development," Working Papers 200, Barcelona Graduate School of Economics.
  25. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
  26. 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.
  27. David DE LA CROIX & Frederic DOCQUIER, 2010. "Do Brain Drain and Poverty Result from Coordination Failures?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  28. David E. Weinstein & Christian Broda, 2004. "Globalization And The Gains From Variety," Econometric Society 2004 Latin American Meetings 327, Econometric Society.
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  30. Gino Gancia & Fabrizio Zilibotti, 2008. "Technological change and the wealth of nations," Economics Working Papers 1125, Department of Economics and Business, Universitat Pompeu Fabra.
  31. Mark R. Rosenzweig, 2010. "Global Wage Inequality and the International Flow of Migrants," Working Papers 983, Economic Growth Center, Yale University.
  32. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
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  35. Michaelowa, Katharina & Waller, Marie, 2003. "Labour market outcomes of education: Evidence for selected non-OECD countries," HWWA Reports 226, Hamburg Institute of International Economics (HWWA).
  36. 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.
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