Addition through Depletion: The Brain Drain as a Catalyst of Human Capital Formation and Economic Betterment

Oded Stark and C. Simon Fan ()
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Oded Stark: University of Bonn

No 192, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: Enabling educated individuals to work abroad entails a brain drain and results in educated unemployment at home. Because the prospect of migration raises the expected returns to higher education it also facilitates a "brain gain": a eveloping economy ends up with a higher fraction of educated individuals. Due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation of migration policy pursued in both the current period and the preceding period can greatly facilitate the "take-off" of a developing economy in the current period. Thus we identify a new policy tool that could yield an improvement in the well-being of the population of a developing economy: a controlled migration of educated workers.

Keywords: Brain drain; human capital formation; externalities; economic growth; social welfare (search for similar items in EconPapers)
JEL-codes: F22 H23 I30 J61 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-pbe
Date: 2003-06-04

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Persistent link: http://EconPapers.repec.org/RePEc:ecj:ac2003:192

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