Differential migration prospects, skill formation, and welfare

Oded Stark and Roman Zakharenko

No 22, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics

Abstract: This paper develops a one sector, two-input model with endogenous human capital formation. The two inputs are two types of skilled labor: engineering, which exerts a positive externality on total factor productivity, and law, which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the(inefficient) free-market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration lottery, and even the individuals who practice law.

Keywords: heterogeneous human capital; differential externality effects; migration of educated workers; human capital formation; efficient acquisition of human capital; beneficial brain drain (search for similar items in EconPapers)
JEL-codes: F22 J61 R23 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-hrm
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Related works:
Journal Article: Differential Migration Prospects, Skill Formation, and Welfare (2012)
Working Paper: Differential Migration Prospects, Skill Formation, and Welfare (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:22

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