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Brain gain : claims about its size and impact on welfare and growth are greatly exaggerated

  • Schiff, Maurice

Based on static partial equilibrium analysis, the"new brain drain"literature argues that, by raising the return to education, a brain drain generates a brain gain that is, under certain conditions, larger than the brain drain itself, and that such a net brain gain results in an increase in welfare and growth due to education's positive externalities. This paper argues that these claims are exaggerated. In the static case, and based on both partial and general equilibrium considerations, the paper shows that (1) the size of the brain gain is smaller than suggested in that literature; (2) the impact on welfare and growth is smaller as well (for any brain gain size); (3) a positive brain gain is likely to result in a smaller, possibly negative, human capital gain; (4) an increase in the stock of human capital may have a negative impact on welfare and growth; and (5) in a dynamic framework, the paper shows that the steady-state brain gain is equal to the brain drain so that a'beneficial brain drain'cannot take place, and a net brain loss is likely during the transition.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3708.

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Date of creation: 01 Sep 2005
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Handle: RePEc:wbk:wbrwps:3708
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  1. Stark, Oded & C Simon Fan, 2003. "Addition through Depletion: The Brain Drain as a Catalyst of Human Capital Formation and Economic Betterment," Royal Economic Society Annual Conference 2003 192, Royal Economic Society.
  2. Jean-Pierre Vidal, 1998. "The effect of emigration on human capital formation," Journal of Population Economics, Springer, vol. 11(4), pages 589-600.
  3. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  4. Mattoo, Aaditya & Neagu, Ileana Cristina & Ozden, Caglar, 2005. "Brain waste? Educated immigrants in the U.S. labor market," Policy Research Working Paper Series 3581, The World Bank.
  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. Harold Alderman & John Hoddinott & Bill Kinsey, 2004. "Long Term Consequences Of Early Childhood Malnutrition," HiCN Working Papers 09, Households in Conflict Network.
  7. Kugler, Maurice & Rapoport, Hillel, 2005. "Skilled emigration, business networks and foreign direct investment," Discussion Paper Series In Economics And Econometrics 0503, Economics Division, School of Social Sciences, University of Southampton.
  8. Ramón López & Maurice Schiff, 1998. "Migration and the Skill composition of the Labor Force: The Impact of Trade Liberalization in LDCs," Canadian Journal of Economics, Canadian Economics Association, vol. 31(2), pages 318-336, May.
  9. Strauss, J. & Thomas, D., 1995. "Health, Nutrition and Economic development," Papers 95-23, RAND - Labor and Population Program.
  10. Solimano, Andres, 2001. "International migration and the global economic order : an interview," Policy Research Working Paper Series 2720, The World Bank.
  11. Docquier, Frederic & Rapoport, Hillel, 2004. "Skilled migration: the perspective of developing countries," Policy Research Working Paper Series 3382, The World Bank.
  12. P. Giannoccolo, 2004. "The Brain Drain. A Survey of the Literature," Working Papers 526, Dipartimento Scienze Economiche, Universita' di Bologna.
  13. Dora L. Costa, 2003. "Health and Labor Force Participation over the Life Cycle: Evidence from the Past," NBER Books, National Bureau of Economic Research, Inc, number cost03-1, December.
  14. Stark, Oded, 2004. "Rethinking the Brain Drain," World Development, Elsevier, vol. 32(1), pages 15-22, January.
  15. Adams, Richard H. Jr., 2003. "International migration, remittances, and the brain drain ; a study of 24 labor exporting countries," Policy Research Working Paper Series 3069, The World Bank.
  16. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
  17. Schiff, Maurice & Valdes, Alberto, 1990. "Nutrition: Alternative Definitions and Policy Implications," Economic Development and Cultural Change, University of Chicago Press, vol. 38(2), pages 281-92, January.
  18. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  19. Simon Commander & Mari Kangasniemi & L. Alan Winters, 2004. "The Brain Drain: Curse or Boon? A Survey of the Literature," NBER Chapters, in: Challenges to Globalization: Analyzing the Economics, pages 235-278 National Bureau of Economic Research, Inc.
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