Global competition for attracting talents and the world economy

Frédéric Docquier and Joël Machado

No 2014020, LIDAM Discussion Papers IRES 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: F22 F63 I24 O15 (search for similar items in EconPapers)
Pages: 34
Date: 2014-11-07
New Economics Papers: this item is included in nep-hrm, nep-int and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Global Competition for Attracting Talents and the World Economy (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2014020

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