Working Paper: NBER ID: w16813
Authors: Yaw Nyarko
Abstract: We look at the decision of the government or "central planner" in the allocation of scarce governmental resources for tertiary education, as well as that for the individual. We provide estimates of the net present values, or cost and benefits. These include costs of tertiary education; the benefits of improved skills of those who remain in the country; and also takes into account the flows of the skilled out of the country (the brain drain) as well as the remittances they bring into the country. Our results are positive for the net benefits relative to costs. Our results suggest that (i) there may be room for creative thinking about the possibility that the brain drain could provide mechanisms for dramatic increases in education levels within African nations; and (ii) by at least one metric, spending by African nations on higher education in this period yielded positive returns on the investment. Our results on the individual decision problem resolve a paradox in the returns to education literature which finds low returns to tertiary education.
Keywords: brain drain; remittances; higher education; sub-Saharan Africa
JEL Codes: F35; F43; O0; O55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Government spending on tertiary education (H52) | Improved skills among those who remain (J24) |
| Government spending on tertiary education (H52) | Remittances from those who emigrate (F24) |
| Remittances from those who emigrate (F24) | Local economic benefits (R53) |
| Brain drain (F22) | Higher expected wages abroad (F16) |
| Higher expected wages abroad (F16) | Decisions to pursue tertiary education (I23) |
| Decisions to pursue tertiary education (I23) | Low local returns on education offset by high returns abroad (I26) |
| Government spending on tertiary education (H52) | Local economic benefits (R53) |
| Brain drain (F22) | Local economic benefits (R53) |