Ability Drain

Maurice Schiff

No 9542, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Is ability drain (AD) economically significant? That immigrants or their children founded over 40% of the Fortune 500 US companies suggests it is. Moreover, brain drain (BD) induces a brain gain (BG). This cannot occur with ability. Nonetheless, while BD has been studied extensively, AD drain has not. I examine migration's impact on ability (a), education (h), and productive human capital or 'skill' (s) – which includes both a and h – for source country residents and migrants, under the points system (PS), 'vetting' system (VS), which accounts for s (e.g., US H1-B visa), and 'new' points system (NS), which combines PS and VS (e.g., Canada, 2015+). I find that i) Migration reduces (raises) source country residents' (migrants') average ability and has an ambiguous (positive) impact on their average education and skill, with a net skill drain more likely than a net BD; ii) AD is greater than BD; iii) the effects increase with ability's inequality or variance V(a); iv) the policies in turn raise V(a), V(h) and V(s), with V(a) > V(h); v) effects in i) - iv) are larger under VS than PS; vi) residents' (migrants') consumption is lower (higher) under either policy than under a closed economy; vii) consumption falls with ability's inequality; viii) contrary to the situation with education and skill, consumption inequality is lower under VS than PS; viii) ability, education and skill (consumption) under NS are identical (is larger than) the combined values under PS and VS. Orders of magnitude, empirical research plans, and policy implications are provided.

Keywords: migration; points system; vetting system; ability drain; brain drain; brain gain (search for similar items in EconPapers)
JEL-codes: F22 J24 J61 O15 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2015-12
New Economics Papers: this item is included in nep-mig
References: View references in EconPapers View complete reference list from CitEc
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Published - published as 'Ability drain: size, impact, and comparison with brain drain under alternative immigration policies' in: Journal of Population Economics , 2017, 30, 1337- 1354

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Working Paper: Ability Drain (2015)
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