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Global competition for attracting talents and the world economy

Frédéric Docquier () and Joël Machado ()

No 2014020, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper studies the effect of liberalizing the international mobility of college-educated workers on the world economy. First, we combine data on effective and desired migration to identify the net pool of foreign talents (NPFT) of selected high-income countries. So far, the EU15 has poorly benefited from its NPFT while the US has mobilized a large portion of it. Second, we use a micro-founded model to simulate the effects of skill-selective liberalization shocks. In our benchmark model, a worldwide liberalization induces larger long-run income gains for the EU15 (+8.8 percent) than for the US (+5.9 percent). However, less attractive EU countries such as Austria, Belgium, Germany, Greece, Luxembourg and the Netherlands benefit less than the US. In addition, liberalizing high-skilled migration decreases income per worker by 2.5 percent in developing countries. Overall, it increases efficiency (+6.2 percent in the worldwide average level of income per capita) and inequality (+1.2 percentage points in the Theil inequality index). Much greater effects can be obtained if total factor productivity varies with human capital.

Keywords: brain drain; human capital; migration; growth; inequality (search for similar items in EconPapers)
JEL-codes: O15 F22 F63 I24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm, nep-int and nep-mig
Date: 2014-11-07
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Journal Article: Global Competition for Attracting Talents and the World Economy (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2014020

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