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Is migration a good substitute for education subsidies ?

  • Docquier, Frederic
  • Faye, Ousmane
  • Pestieau, Pierre

Assuming a given educational policy, the recent brain drain literature reveals that skilled migration can boost the average level of schooling in developing countries. This paper introduces educational subsidies determined by governments concerned by the number of skilled workers remaining in the country. The theoretical analysis shows that developing countries can benefit from skilled emigration when educational subsidies entail high .fiscal distortions. However when taxes are not too distortionary, it is desirable to impede emigration and subsidize education. The authors investigate the empirical relationship between educational subsidies and migration prospects, obtaining a negative relationship for 105 countries. Based on this result, the analysis revisits the country specific effects of skilled migration upon human capital. The findings show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4614.

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Date of creation: 01 May 2008
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Handle: RePEc:wbk:wbrwps:4614
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  1. David N. Weil & Oded Galor, 1999. "From Malthusian Stagnation to Modern Growth," American Economic Review, American Economic Association, vol. 89(2), pages 150-154, May.
  2. Michel Beine & Frederic Docquier & Hillel Rapoport, 2006. "Measuring International Skilled Migration: New Estimates Controlling for Age of Entry," CReAM Discussion Paper Series 0613, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  3. Stark, Oded & Wang, Yong, 2001. "Inducing Human Capital Formation: Migration as a Substitute for Subsidies," Economics Series 100, Institute for Advanced Studies.
  4. 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.
  5. 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.
  6. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
  7. Edward L. Glaeser & Gary S. Becker & Kevin M. Murphy, 1999. "Population and Economic Growth," American Economic Review, American Economic Association, vol. 89(2), pages 145-149, May.
  8. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  9. 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.
  10. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  11. Mountford, Andrew, 1997. "Can a brain drain be good for growth in the source economy?," Journal of Development Economics, Elsevier, vol. 53(2), pages 287-303, August.
  12. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  13. Nils-Petter Lagerlöf, 2003. "From Malthus to Modern Growth: Can Epidemics Explain the Three Regimes?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 755-777, 05.
  14. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
  15. Commander, Simon & Chanda, Rupa & Kangasniemi, Mari & Winters, L. Alan, 2004. "Must Skilled Migration Be a Brain Drain? Evidence from the Indian Software Industry," IZA Discussion Papers 1422, Institute for the Study of Labor (IZA).
  16. Mari Kangasniemi & L. Alan Winters & Simon Commander, 2004. "Is the medical brain drain beneficial? Evidence from overseas doctors in the UK," LSE Research Online Documents on Economics 19984, London School of Economics and Political Science, LSE Library.
  17. Nils-Petter Lagerloef, 2000. "From Malthus to Modern Growth: The Three Regimes Revisited," Econometric Society World Congress 2000 Contributed Papers 1248, Econometric Society.
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