Working Paper: CEPR ID: DP7682
Authors: Luca Marchiori; Iling Shen; Frdric Docquier
Abstract: High-skilled emigration has been found to affect developing economies via different channels. With a calibrated general equilibrium framework, this paper finds that the short-run impact of brain drain on resident human capital is extremely crucial, as it does not only determine the number of high-skilled workers available to domestic production, but it affects the sending economy?s capacity to innovate/adopt modern technologies. The latter impact is particularly important in globalization, where capital investments are made in places with higher production efficiencies. Hence, despite the positive feedback effects, those countries facing prevalent high-skilled emigration are the most candid victims to brain drain.
Keywords: brain drain; capital flow; development; human capital
JEL Codes: F22; J24; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high-skilled emigration (F22) | resident human capital (J24) |
| resident human capital (J24) | economy's capacity to innovate and adopt modern technologies (O49) |
| high-skilled emigration (F22) | economy's capacity to innovate and adopt modern technologies (O49) |
| demographic shock of increased high-skilled emigration (J11) | working-age population supporting retirees (J26) |
| demographic shock of increased high-skilled emigration (J11) | human capital formation (J24) |
| demographic shock of increased high-skilled emigration (J11) | technological progress in less advanced regions (O55) |
| enlarged diaspora (F22) | foreign direct investment (FDI) (F23) |