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Differential migration prospects, skill formation, and welfare

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  • Stark, Oded
  • Zakharenko, Roman

Abstract

This paper develops a one sector, two-input model with endogenous human capital formation. The two inputs are two types of skilled labor: engineering, which exerts a positive externality on total factor productivity, and law, which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the(inefficient) free-market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration lottery, and even the individuals who practice law.

Suggested Citation

  • Stark, Oded & Zakharenko, Roman, 2011. "Differential migration prospects, skill formation, and welfare," University of Tuebingen Working Papers in Economics and Finance 22, University of Tuebingen, Faculty of Economics and Social Sciences.
  • Handle: RePEc:zbw:tuewef:22
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    References listed on IDEAS

    as
    1. Antonio Ciccone & Giovanni Peri, 2006. "Identifying Human-Capital Externalities: Theory with Applications," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 381-412.
    2. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
    3. David N. Weil, 2005. "Accounting for the Effect of Health on Economic Growth," NBER Working Papers 11455, National Bureau of Economic Research, Inc.
    4. Iyigun, Murat F & Owen, Ann L, 1998. "Risk, Entrepreneurship, and Human-Capital Accumulation," American Economic Review, American Economic Association, vol. 88(2), pages 454-457, May.
    5. Iyigun, Murat F & Owen, Ann L, 1999. "Entrepreneurs, Professionals, and Growth," Journal of Economic Growth, Springer, vol. 4(2), pages 213-232, June.
    6. Paul A. David, 2005. "THE TALE OF TWO TRAVERSES Innovation and Accumulation in the First Two Centuries of U.S. Economic Growth," Macroeconomics 0502019, EconWPA.
    7. Paolo E. Giordani & Michele Ruta, 2011. "The Immigration Policy Puzzle," Review of International Economics, Wiley Blackwell, vol. 19(5), pages 922-935, November.
    8. Paul A. David, 2005. "Reforming the Taxation of Human Capital: A Modest Proposal for Promoting Economic Growth," HEW 0502002, EconWPA.
    9. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
    10. Paul A. David, 2005. "Two Centuries of American Macroeconomic Growth From Exploitation of Resource Abundance to Knowledge-Driven Development," Macroeconomics 0502021, EconWPA.
    11. Stark, Oded & Casarico, Alessandra & Devillanova, Carlo & Uebelmesser, Silke, 2012. "On the formation of international migration policies when no country has an exclusive policy-setting say," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 420-429.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why India should let engineers and doctors emigrate
      by Economic Logician in Economic Logic on 2012-01-11 21:28:00

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    Cited by:

    1. repec:eee:regeco:v:66:y:2017:i:c:p:91-107 is not listed on IDEAS
    2. Zakharenko, Roman, 2012. "Human capital acquisition and international migration in a model of educational market," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 808-816.
    3. Gega Todua, 2017. "Financing Education Abroad: A Developing Country Perspective," CERGE-EI Working Papers wp608, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. Stark, Oded & Byra, Lukasz & Casarico, Alessandra & Uebelmesser, Silke, 2017. "A critical comparison of migration policies: Entry fee versus quota," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 91-107.

    More about this item

    Keywords

    heterogeneous human capital; differential externality effects; migration of educated workers; human capital formation; efficient acquisition of human capital; beneficial brain drain;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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