Working Paper: NBER ID: w12761
Authors: Peter J. Kuhn; Carol McAusland
Abstract: We consider the welfare effects of the emigration of workers who produce a public good (knowledge). We distinguish between the knowledge diversion and knowledge creation effects of such emigration, and show that the remaining residents of a country can gain from emigration, even when tastes for knowledge goods exhibit a kind of 'home bias'. In contrast to existing models of beneficial brain drain (BBD), our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration 'lottery'. Instead, they are driven purely by the public nature of knowledge goods, combined with differences in market size that induce greater knowledge creation by emigrants abroad than at home. BBD is even more likely in the presence of weak sending-country intellectual property rights (IPRs), or when source country IPR policy is endogenized.
Keywords: brain drain; knowledge workers; intellectual property rights; consumer welfare
JEL Codes: F22; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Emigration (F22) | Higher-quality knowledge goods produced abroad (F12) |
| Higher-quality knowledge goods produced abroad (F12) | Increased consumer welfare in source country (F61) |
| Foreign market size (F61) | Knowledge creation (O36) |
| Knowledge creation (O36) | Welfare gains for sending country (F16) |
| Weak IPRs (O34) | Amplified benefits of emigration (F22) |
| Knowledge creation effect > Knowledge diversion effect (D85) | Brain drain is beneficial (I25) |