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Subsidizing education in the economic periphery: Another pitfall of regional policies?

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  • Suedekum, Jens

Abstract

A very prominent instrument of regional policy is to foster education and human capital for-mation in economically lagging regions. However, this type of regional policy might actually hurt instead of help the recipient areas. The reason is that individual geographical mobility increases with the personal skill level. Through education subsidies, particularly if targeted on relatively high skilled workers, individuals can cross some threshold level of qualification beyond which emigration pays off. Regional policies then result in a human capital flight harmful to individuals remaining in the economic periphery. This fatal result does not hold for policies that focus on the relatively low skilled.

Suggested Citation

  • Suedekum, Jens, 2003. "Subsidizing education in the economic periphery: Another pitfall of regional policies?," University of Göttingen Working Papers in Economics 17, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:17
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    References listed on IDEAS

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    Cited by:

    1. Bogdan Glăvan, 2008. "Brain Drain: A Management or a Property Problem?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(4), pages 719-737, October.

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    More about this item

    Keywords

    Regional Policy; Education Subsidies; Human Capital; Labour Mobility; European Union;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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