Emigration of Highly Skilled Labor: Determinants & Impacts

Driouchi, Ahmed and Boboc, Cristina and Zouag, Nada (2009): Emigration of Highly Skilled Labor: Determinants & Impacts.

Abstract

This is an additional contribution to the large body of literature developed in the area of economics of skilled labor migration. It focuses on two major objectives that are the determinants of the migration and its likely impacts on developing economies. Within the framework of the new economics of skilled labor migration, this research has attempted to test empirically the relevance of some components of the most recent new economic models of skilled labor migration. Using available data from international organizations (World Bank, OECD, UNESCO…) and others, in both regressions analyzes and economic simulations, hypotheses have been tested and directions of empirical results identified for larger policy discussions. The theoretical models that have been given priority in these empirical investigations are mainly those of Beine & al, Stark (2005) & al, N. Duc Thanh (2004) and M. Schiff (2005). A major focus has been placed on the models suggested by Duc Thanh (2004) where useful specifications of the functional forms were made. This selected framework uses the similarities that have been observed between this model and that of Stark and Schiff.

The empirical results that have been obtained confirm the role of relative wages, the availability of better opportunities such as jobs, the importance of the living conditions as well as the existence of more attractive working conditions in destination countries relative to source economies. Concerning the estimation of the impacts of skilled labor migrations for both developed and developing economies, the specifications have followed Beine, Stark and Duc Thanh models with special emphasis placed on this latter. Given the dynamic nature of Beine’s model and with the limits on the available time series, significant empirical results are obtained and tests of Beine’s propositions achieved. The regressions results using the subcomponent of the knowledge economic index have shown significantly the effects of both domestic education and the attractiveness of foreign relative wages as major determinants that support the explanation of the level of knowledge added by the tertiary sector in each economy. In the sense of these estimations, it appears clearly that any economy is under two major opposite effects. On one hand, there is the relative share of investment in education that affects positively the human capital formation in any country but with higher impact in developing economies. On the other hand, there is the magnitude of the relative wages that negatively affect the performance of developing economies as measured by the subcomponent of the knowledge economic index. These results have been first confirmed through regression analysis.

These preliminary findings suggest that local, national, regional and international economic policies consider the new theoretical and empirical trends shown so far by these results.

• Item Type: MPRA Paper
• Language: English
• Keywords: Key words: Sklled labor; brain drain; development
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F22 - International Migration

References

Beine, M., Docquier, F., & Rapoport, H. (2008 ). Brain drain and human capital formation in developing countries: winners and losers. Economic Journal, 118(4), 631-52.

Beine, M., Docquier, F., & Rapoport, H. (2001). Brain Drain and Economic Growth: Theory and Evidence. Journal of Development Economics, (64), 275-289.

Benhabib, J. & Spiegel, M. (1994). The Role of Human Capital in Economic Development: Evidence from Aggregate Cross Section Data. Journal of Monetary Economics, 34,143-173.

Bhagwati, J. N. & Hamada, K. (1974). The Brain Drain, International Integration of Markets for Professionals and Unemployment: A Theoretical Analysis. Journal of Development Economics, 1(1), 19-42.

Bhagwati J. N. & Hamada, K. (1982). Tax Policy in Presence of Emigration. Journal of Public Economics, 18, 291-317.

Blandy, R. (1968). Brain Drains’ in an integrating Europe. Comparative Education Review, 12(2), 180-193.

Borjas, G. J. (1995). The Economic Benefits from Immigration. Journal of Economic Perspectives, 9(2), 3-22.

Bouoiyour, J., Jellal, M. & Wolff, F.C. (2003). Effective Costs of Brain Drain. Brazilian Journal of Business Economics, 3(1), 6-16.

Carrington, W. J. & Detragiache, E. (1999). How Extensive is the Brain Drain? Finance and Development, 46-49.

Chammartin G. & Cantú-Bazaldúa, F. (2005). Migration prospects after the 2004 enlargement of the European Union. International Migration Papers (73).

Clemens, M. A. & Pettersson, G. (2006). A New Database of Health Professional Emigration from Africa. Center for Global Development, Working Paper Number 95.

Docquier, F. & Rapoport, H. (2008). Skilled migration: The perspective of developing countries, in J. Bhagwati and G. Hanson, Skilled migration: prospects, problems and policies, Russell Sage Foundation, New York.

Docquier F & Rappaport, H. (1997). Fuite des Cerveaux et Formation du Capital Humain, Economie Internationale, 79(3), 63-71.

Duc Thanh, N. (2004). Heterogeneous talent and optimal emigration. A contribution to the new economics of the Brain Drain. Retrieved from: http://www.isid.ac.in/~planning/ndt.pdf

Dumont, J. C. & Lemaître, G. (2005). Counting Immigrants and Expatriates in OECD countries: A new perspective. OECD Economic Studies, 1, 53-90.

Faini, R. (2003). Is the brain drain an unmitigated blessing? World Institute for Development Economics Research, United Nations University, Discussion Paper No. 2003/64.

Faini, R. (2002). Développement, commerce internationale et migration. Revue d’Economie du Développement, 2, 85-116.

Fujita, M., Krugman, P. & Venables, A. (1999). The spatial economy: cities, regions and international trade, Cambridge: MIT Press.

Galor, O. & Stark, O. (1990). Migrants’ savings, the probability of return migration and migrants’ performance. International Economic Review, 31, 463-467.

Glaser, W. A. (1979). The brain drain: emigration and return. Population and Development Review, 5(1),173.

Grubel, H. G. & Scott, A. (1966). The international flow of human capital. American Economic Review, 56, 268-74.

Haque, N. U. & Kim, S. J. (1995). Human capital flight: Impact of migration on income and growth’’, IFM Staff Papers, 42(3), 577-607.

Ioannidis, J. P. (2004). Global estimates of high-level brain drain and deficit. FASEB J. 18, 936-939.

Johnson, G. E. (1980). The labor market effects of immigration. Industrial and Labor Relations Review, 33, 331-341.

Korner, H. (1992). The Migration of Labor. International Migration Review, 26, 1462-1463.

Kwok, P. & Leland, H. (1984). Migration and asymmetric information: Reply. American Economic Review, 74, 535.

Lowell, B. L. & Findlay, A. (2002). Migration of highly skilled persons from developing countries: Impact and policy responses. International Migration Papers, (44).

Lowell, B. L. (2002). Some developmental effects of the international migration of highly skilled persons. International Migration Papers, (46).

Lucas, R. J. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3-42.

Maynard, A. (1976). Taxing the brain drain: A proposal. The brain drain and taxation: theory and Analysis. The Economic Journal, 86(344), 909-911.

Mishra, P. (2006). Emigration and brain drain: Evidence from the Caribbean. IMF Working Paper, WP/06/25.

Miyagiwa, K. (1991). Scale economics in education and the brain drain Problem. International Economic Review, 23, 734-759.

Molho, I. (1992). The Migration of Labor. The Economic Journal, 102, 997-999.

Mountford, A. (1997). Can a brain drain be good for growth in the source economy? Journal of Development Economics, 53(2), 287-303.

Myers, R. G. (1968). The brain drain. The American Economic Review, 58(5), 1490-1492.

Piketty, N. (1997). Immigration et Justice Sociale. Revue Economique, 48(5), 1291-1309.

Rogg Meyer, E. (1982). The brain drain: Emigration and Return. International Migration Review, 16(3), 680-681.

Roisin, A. C. (2004). The brain drain: Challenges and opportunities for development. UN Chronicle, 4, 51.

Schiff, M. (2005). Brain Gain: Claims about its Size and Impact on Welfare and Growth are Greatly Exaggerated. IZA DP No. 1599.

Stark O. (2002). The economics of the brain drain turned on its head, mimeo.

Stark, O. (1981). The Asset Demand for Children during Agricultural Modernization. Population and Development Review, 7, 671-675.

Stark, O. (2005). The New Economics of the Brain Drain. Royal Economic Society, Annual conference. Nottingham University.

Stark, O., Helmenstein, C. & Prskawetz, A. (1997). A brain gain with a brain drain. Economic Letters, 55, 227-34.

Stark, O., Casarico, A., Devillanova, C. & Uebelmesser, S. (2005). The New Economics of the Brain Drain: Mapping the Gains. Retrieved from: http://www.socialpolitik.de/tagungshps/2005/Papers/Casarico.pdf

Stark, O. & Wang, Y. (2002). Inducing Human Capital Formation: Migration as Substitute for Subsidies. Journal of Public Economics, 86, 29-46.

Todaro, M. P. (1997). Altruism and Beyond: An Economic Analysis of Transfers and Exchanges within Families and Groups. Population and Development Review, 23, 442.

Todaro, M. P. (1991). The Migration of Labor. Population and Development Review, 17, 744-745.

Van der Kroef, J. M. (1969). The Brain Drain. The Journal of Higher Education, 40(3), 246-249.

Vidal, J. P. (1998). The effect of Emigration on Human Capital Formation. Journal of population Economics, 11(4), 489-600.

Wilson, J. D. (2005). Taxing the Brain Drain: A Reassessment of the Bhagwati Proposal. Jagdish Bhagwati’s seventieth birthday conference, August 5-6, Columbia University.

Wong, K. & Yip, C. K. (1999). Education Economic Growth and Brain Drain. Journal of Economic Dynamic and Control, 23, 699.