Endogenous Skill Formation and the Source Country Effects of Skilled Labor Emigration from Developing Countries

Hartmut Egger () and Gabriel Felbermayr

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2009, vol. 229, issue 6, 706-729

Abstract: In this paper we set up a simple theoretical framework to study the possible source country effects of skilled labor emigration from developing countries. We show that for given technologies, labor market integration necessarily lowers GDP per capita in a poor source country of emigration, because it distorts the education decision of individuals. As pointed out by our analysis, a negative source country effect also materializes if all agents face identical emigration probabilities, irrespective of their education levels. This is in sharp contrast to the case of exogenous skill supply. Allowing for human capital spillovers, we further show that with social returns to schooling there may be a counteracting positive source country effect if the prospect of emigration stimulates the incentives to acquire education. Since, in general, the source country effects are not clear, we calibrate our model for four major source countries - Mexico, Turkey, Morocco, and the Philippines - and show that an increase in emigration rates beyond those observed in the year 2000 is very likely to lower GDP per capita in poor economies.

Keywords: Emigration; endogenous skill formation; source country effects; Emigration; endogenous skill formation; source country effects (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:229:y:2009:i:6:p:706-729

DOI: 10.1515/jbnst-2009-0604

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