INTERNATIONAL MIGRATION, HUMAN CAPITAL COMPOSITION AND MIDDLE-INCOME TRAPS

Zhaobin Fan and Hui Li ()
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Zhaobin Fan: International Business School, Jinan University, 601 Huangpu W Ave, Guangzhou Shi, Guangdong Sheng, P. R. China
Hui Li: School of Mathematics, University of Birmingham, Ring Rd W, Birmingham B15 2TS, UK

The Singapore Economic Review (SER), 2019, vol. 64, issue 04, 883-897

Abstract: One of the most interesting and debateable topics in China’s economic growth is whether China’s economy would be hindered by a middle-income trap. This paper addresses this topic by analyzing the link between international skilled migration and the middle-income trap. Our study has extended the model proposed by [De la Croix, D. and Docquier F. (2012). Do Brain Drain and Poverty Result from Coordination Failures? Journal of Economic Growth, 17(1) 1–26.] and accounted for the importance of heterogeneity of human capital emphasized by [Jones, F. (2008). The Knowledge Trap: Human Capital and Development Reconsidered. NBER Working Paper No. 14138, Northwestern University.] Results have demonstrated that in the presence of externalities in the formation of human capital, there possibly exist four steady-state development paths in the dynamic system due to coordination failures. These four paths include: (i) the unskilled labor equilibrium which is characterized by low-income and significant loss of skilled labor, (ii) the generalist equilibrium with lower-middle income and significant loss of specialists, (iii) the specialist equilibrium with the characteristics of upper-middle income and significant loss of generalists; and (iv) the skilled equilibrium with high income and insignificant loss of skilled workers. Amongst them, the generalist equilibrium and specialist equilibrium represent two types of middle-income trap.

Keywords: Brain drain; middle-income trap; human capital; multiple equilibria (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1142/S0217590817450060

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