Will Transition Countries Benefit or Lose from the Brain Drain?

Per Lundborg and Calin Rechea
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Calin Rechea: Department of Economics, Postal: School of Economics and Commercial Law, Göteborg University, SE-411 80 Göteborg, Sweden

No 187, Working Paper Series from Trade Union Institute for Economic Research

Abstract: We analyze the theoretical effects on growth and welfare in transition economies of emigration of educated and uneducated labor, of higher emigration probability, etc. Using a Grossman-Helpman growth model, we show that the prospects of labor market integration with the EU raises the expected returns to education, stimulate human capital formation and thus raise the growth rate in the candidate countries. However, given this expected returns, emigration of educated workers tends to lower growth and welfare of those remaining. Thus, while the brain drain reduces welfare, the effects of labor market integration could nevertheless be positive. Emigration of low skilled workers also reduces growth via adverse effects on education. Higher tuition fees, common in transition countries, counteract positive growth effects of market determined wages.

Keywords: Migration; Growth; Welfare (search for similar items in EconPapers)
JEL-codes: J61 O40 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2002-12-27
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-his and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in International Journal of Economic Development , 2003.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:fiefwp:0187

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