Curbing brain drain: Incentive programs and economic fundamentals in shaping college students’ job location decisions

Mengqiao Liu, Ruixin Jia and Yu Yvette Zhang

Economic Analysis and Policy, 2025, vol. 87, issue C, 38-56

Abstract: Human capital is essential for economic development, and college graduates, as a key component, play a critical role in strengthening regional economies and mitigating brain drain. This study examines how city-based employment incentive programs and regional economic conditions influence college graduates’ job location choices. Using job placement data of college students in China, we apply a Random Coefficients Logit model combined with a Difference-in-Differences approach to capture heterogeneous preferences in job location choices lacking individual-level data. Our analysis shows that college students are more responsive to economic conditions, such as higher GDP and lower unemployment, than to most incentive programs. Among all the incentives considered, only cash subsidies for postgraduates affect job location choices, whereas others, including housing subsidies, show limited effectiveness. These findings suggest that financial incentives alone cannot curb brain drain. Policymakers should focus on strengthening regional economic development alongside targeted incentives to attract and retain talent.

Keywords: Job location choice; College graduates; Human capital; Brain drain; Incentive programs (search for similar items in EconPapers)
JEL-codes: H75 J23 J24 N35 R23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:38-56

DOI: 10.1016/j.eap.2025.05.025

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