Optimal education policy and human capital accumulation in the context of brain drain

Abstract

This paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students' efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we find that brain drain has conflicting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the findings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework.

Mais Médicos Program and Human Capital in Argentina: Brain Drain in the Health Sector?

“…Bein et al (2008) examine cross-sectional data from 127 developing countries and report a positive effect: doubling the emigration rate of skilled workers increases the human capital of professionals in the sending country by 5%. In the same sense, other works have reported evidence of a brain gain -positive effect on the stock of workers in the sending country-in developing countries (Clemens, 2007;Shrestha, 2017;Djajic et al, 2018;Chad & Clemens, 2019;Khanna & Morales, 2021).…”

Recognizing New Trends in Brain Drain Studies in the Framework of Global Sustainability

“…Results show that a set of studies focused on destination countries [143][144][145] raises the necessity of a change of approach since these types of studies were initially raised based on the loss of advanced intellectual capital in the countries of origin. However, studies are currently rethinking their orientation to brain gain [12,[145][146][147][148][149], and to ideas of migratory dynamics presented in the brain circulation [12,47,146,147,[150][151][152][153][154]. Results emphasize that policies and efforts need to change if policymakers look at researchers' brain drain concept use.…”

Impacts of Temporary Migration on Development in Origin Countries

“…A large theoretical literature shows that if emigration is uncertain but increasing in likelihood with education or skill levels, then aspiring migrants will invest in human capital accumulation. An endogenous increase in human capital levels, assuming a large enough share of these will be unable to move, can offset the mechanical reduction in the level of human capital due to emigration (Mountford 1997;Stark, Helmenstein, and Prskawetz 1997;Stark, Helmenstein, and Prskawetz 1998;Vidal 1998;Beine, Docquier, and Rapoport 2001;Dos Santos, Postel-Vinay, et al 2004;Beine, Docquier, and Rapoport 2008;Dustmann and Glitz 2011;Docquier and Rapoport 2012;Djajić, Docquier, and Michael 2019).…”