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Brain Drain-Induced Brain Gain and the Bhagwati Tax: Are Early and Recent Paradigms Compatible?

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  • Schiff, Maurice

Abstract

Based on a welfare-maximization model of skilled migration where education generates a positive externality, this paper examines whether the early view regarding brain drain’s (BD) negative impact on source countries – and the Bhagwati tax (𝐵𝑇) associated with it – is compatible with the recent more optimistic BD-induced brain gain view. I derive BD’s impact on education, welfare, the optimal education subsidy (𝑠), and a combination of 𝑠 and (the optimal) 𝐵𝑇, when residents’ (emigrants’) weight in the government’s objective function is 1 (1−𝛽), with 𝛽 𝜖 [0,1]. I find that: i) education, welfare and 𝑠 levels are higher (lower) under an open than under a closed economy for 1−𝛽>(

Suggested Citation

  • Schiff, Maurice, 2018. "Brain Drain-Induced Brain Gain and the Bhagwati Tax: Are Early and Recent Paradigms Compatible?," GLO Discussion Paper Series 262, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:262
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    References listed on IDEAS

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    1. 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, April.
    2. 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.
    3. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, vol. 1(1), pages 19-42, April.
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    More about this item

    Keywords

    Brain drain; brain gain; Bhagwati tax; education subsidy; welfare;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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