The political economy of brain drain

This paper develops a political-economy game of skilled exit, redistribution, repression, and regime survival. Skilled workers are economically valuable because they become entrepreneurs, pay taxes, and generate productive externalities for low-skilled workers. They are also politically dangerous because they can enter political competition in democracy, participate in revolution- ary collective action in autocracy, or leave the country altogether. Governments therefore face a strategic tradeoff. Retaining skilled citizens raises output and fiscal capacity, but it can also increase electoral or revolutionary pressure. Allowing skilled citizens to leave weakens development, but it may relax the incumbent's political constraint. In democracy, redistribution toward the low-skilled majority lowers the return to skilled entrepreneurship and can induce exit. In autocracy, exit barriers and repression are alternative technologies of political survival: hard dictatorships can restrict exit and extract from skilled workers, while soft dictatorships may tolerate emigration because it reduces the pool of potential protesters. We characterize this logic in a one-shot benchmark and a dynamic extension with persistent brain drain and absorbing political turnover. We also allow repression costs to rise with the human-capital intensity of the economy, so that repression becomes more destructive precisely when skilled labor is more productive. The model yields a comparative regime logic of skilled exit: emigration is highest where exit directly relaxes the incumbent's political constraint, as in soft dictatorship, or where redistribution lowers the domestic return to skilled entrepreneurship, as in redistributive democracy; it is lower in elitist democracy and lowest in hard dictatorship.