Return Migration as a Channel of Brain Gain

Abstract

Non-Technical AbstractRecent theoretical and empirical studies have emphasized the fact that the prospect of international migration increases the expected returns to skills in poor countries, linking the possibility of migrating (brain drain) with incentives to higher education (brain gain). If emigration is uncertain and some of the highly educated remain, such a channel may, at least in part, counterbalance the negative effects of brain drain. Moreover, recent empirical evidence seems to show that temporary migration is widespread among highly skilled migrants (such as Eastern Europeans in Western Europe and Asians in the U.S.). This paper develops a simple tractable overlapping generations model that provides an economic rationale for return migration and which predicts who will migrate and who will return among agents with heterogeneous abilities. We use parameter values from the literature and the data on return migration to calibrate our model and simulate and quantify the effects of increased openness on human capital and wages of the sending countries. We find that, for plausible values of the parameters, the return migration channel is very important and combined with the incentive channel reverses the brain drain into significant brain gain for the sending country. Moreover, recent empirical evidence seems to show that temporary migration is widespread among highly skilled migrants (such as Eastern Europeans in Western Europe and Asians in the U.S.). This paper develops a simple tractable overlapping generations model that provides an economic rationale for return migration and which predicts who will migrate and who will return among agents with heterogeneous abilities. We use parameter values from the literature and the data on return migration to calibrate our model and simulate and quantify the effects of increased openness on human capital and wages of the sending countries. We find that, for plausible values of the parameters, the return migration channel is very important and combined with the incentive channel reverses the brain drain into significant brain gain for the sending country.

Intentions to Return: Evidence from Romanian Migrants

“…The cross-sectional nature of the data restricts interpretation particularly, in this case, because we do not know whether these migrants perceive such skills as having a higher return in Romania than abroad. However the model does control for age and years as a migrant, so our results are not consistent with the brain-gain argument of Dustman (1994), Borjas and Bratsberg, (1996, Santos and Postel-Vinay, (2003) and Mayr and Peri, (2008).…”

“…In addition to these preference models of return migration, some of the recent brain-gain literature focuses on experiences gained abroad having higher returns in the home country (Reinhold and Thom, 2009;Barret and O'Connell, 2000;Barret and Goggin, 2010;Iara, 2006). Similarly, skills acquired abroad may have higher returns in the home country than in the host country, causing return migration (Dustman, 1994(Dustman, , 1995Borjas and Bratsberg, 1996;Santos and Postel-Vinay, 2003;Mayr and Peri, 2008). Other factors that may affect the return migration process include information costs (Jayet andGannon, 1991, Stark, 1995;Dustmann, 1998), the role of remittances (Rapoport and Docquier (2003);Dustman and Metres, 2009) and purchasing power differentials (Djajic, 1988;Stark, Helmenstein and Yegorov, 1997;Dustmann, 1997).…”

Return migration, human capital accumulation and the brain drain

“…Other papers that analyze this motive are Borjas and Bratsberg (1996), Santos and Postel-Vinay (2003), De Coulon and Piracha (2005), and Mayr and Peri (2008). These models assume that individual skills are onedimensional.…”

“…4 Several studies suggest that entry restrictions based on skill in the receiving countries provide an incentive to invest in human capital in the source county (see Mountford, 1997, Docquier and Rapoport, 1997, Stark et al, 1998, and Vidal, 1998. This may then mitigate the brain drain, or even turn it into a brain gain (Beine, Docquier andRapoport, 2001, Mayr andPeri, 2008). mobility even under conditions of certainty.…”

Informing migration policies: a data primer

“…Migrants obtain skills and financial resources during their time away, which can prove useful on return (Mayr and Peri, 2008;.…”