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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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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
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