Brain Drain or Brain Dilution Tax: A Sending Country’s Perspective

Leonid Azarnert

No 12053, CESifo Working Paper Series from CESifo

Abstract: I investigate how taxing immigrants and redistributing the collected funds as educational subsidies influence human capital accumulation and growth in the source economy. The analysis is performed in a two-country growth model with endogenous fertility, in which public knowledge spillovers from the more advanced destination economy amplify the productivity of investment in children’s education in the sending country. I demonstrate that, while in the short run, the source economy accumulates more human capital if the subsidies are provided domestically, if the spillover effect is strong enough, in the long run, it can accumulate more human capital if education is subsidized in the destination country.

Keywords: migration; child education; fertility; human capital; growth; brain drain; brain dilution tax (search for similar items in EconPapers)
JEL-codes: D30 F22 J10 J13 J24 O15 O40 (search for similar items in EconPapers)
Date: 2025
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