International Mobility of the Highly Skilled, Endogenous R&D, and Public Infrastructure Investment

Volker Grossmann and David Stadelmann

No 3366, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper theoretically and empirically analyzes the interaction of emigration of highly skilled labor, an economy’s income gap to potential host economies of expatriates, and optimal public infrastructure investment. In a model with endogenous education and R&D investment decisions we show that international integration of the market for skilled labor aggravates between-country income inequality by harming those which are source economies to begin with while benefiting host economies. When brain drain increases in source economies, public infrastructure investment is optimally adjusted downward, whereas host economies increase it. Evidence from 77 countries well supports our theoretical hypotheses.

Keywords: educational choice; brain drain; R&D investment; cross-country evidence; public infrastructure investment (search for similar items in EconPapers)
JEL-codes: F22 H40 O30 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2008-02
New Economics Papers: this item is included in nep-edu, nep-lab and nep-mig
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Citations: View citations in EconPapers (10)

Published - published as "Does International Mobility of High-Skilled Workers Aggravate Between-Country Inequality?" in: Journal of Development Economics, 2011, 95 (1), 88 - 94

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