Working Paper: NBER ID: w10618
Authors: Alexander Haupt; Eckhard Janeba
Abstract: This paper analyzes the relationship between brain drain, human capital accumulation and individual net incomes in the presence of a redistributional tax policy, credit market constraints, administrative costs of tax collection, and lack of government commitment. We characterize how decreasing migration costs for skilled workers affect the time-consistent policies of a government that wants to shift resources from skilled to unskilled workers. In our main result we show that a decline in migration costs is Pareto improving when migration costs are high, but have ambiguous effects when these costs are low. Moreover, mobility costs and human capital accumulation are positively correlated.
Keywords: brain drain; human capital; redistribution; migration costs; government policy
JEL Codes: F22; H2; I2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decrease in migration costs (F16) | Increase in consumption of skilled workers (J24) |
| Decrease in migration costs (F16) | Increase in consumption of unskilled workers (F66) |
| Decrease in migration costs (F16) | Decrease in consumption of unskilled workers (F66) |
| Decrease in migration costs (F16) | Decrease in taxes on skilled workers (H31) |
| Decrease in taxes on skilled workers (H31) | Limit in government's ability to redistribute resources towards unskilled workers (F66) |
| Higher migration costs (F24) | More favorable redistribution policies (H23) |
| Optimal migration costs depend on government efficiency and international wage differentials (F16) | Optimal migration costs (F16) |