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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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  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. 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.
  19. 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.
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  27. 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).
  28. Davin Chor, 2008. "Skilled and Unskilled Wages in a Globalizing World, 1968-1998," Working Papers 06-2008, Singapore Management University, School of Economics.
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  33. 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.
  34. Paolo Epifani & Gino Gancia, 2004. "The skill bias of world trade," Economics Working Papers 833, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2007.
  35. 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.
  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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