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Brain drain and Remittances: implications for the source country

Dilek Cinar and Frédéric Docquier ()

Brussels Economic Review, 2004, vol. 47, issue 1, 103-118

Abstract: In this paper, we model a developing economy in which individual decisions about education and migration are constrained by capital market imperfections (liquidity constraints). We examine the joint impact of brain drain and international remittances on human capital accumulation in the emigration country. We derive the condition under which the emigration of the most talented workers stimulates the economy-wide average stock of human capital in the sending country (compared to the closed economy benchmark). Such a BBD outcome (beneficial brain drain) is obtained (i) when the return to education is high compared to the costs of education and migration and (ii) when remittances received by each young are important. Unlike recent papers in that literature, the BBD cannot be obtained if emigration rates are small.

Keywords: skilled migration; immigration policy; human capital; growth (search for similar items in EconPapers)
JEL-codes: F22 J24 J61 J68 (search for similar items in EconPapers)
Date: 2004
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Handle: RePEc:bxr:bxrceb:y:2004:v:47:i:1:p:102-118