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Addition through Depletion: The Brain Drain as a Catalyst of Human Capital Formation and Economic Betterment

Author

Listed:
  • Stark, Oded

    (University of Bonn)

  • C Simon Fan
Abstract
Enabling educated individuals to work abroad entails a brain drain and results in educated unemployment at home. Because the prospect of migration raises the expected returns to higher education it also facilitates a "brain gain": a eveloping economy ends up with a higher fraction of educated individuals. Due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation of migration policy pursued in both the current period and the preceding period can greatly facilitate the "take-off" of a developing economy in the current period. Thus we identify a new policy tool that could yield an improvement in the well-being of the population of a developing economy: a controlled migration of educated workers.

Suggested Citation

  • Stark, Oded & C Simon Fan, 2003. "Addition through Depletion: The Brain Drain as a Catalyst of Human Capital Formation and Economic Betterment," Royal Economic Society Annual Conference 2003 192, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:192
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    References listed on IDEAS

    as
    1. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1997. "A brain gain with a brain drain," Economics Letters, Elsevier, vol. 55(2), pages 227-234, August.
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    3. Fan, C. Simon & Stark, Oded, 2007. "International migration and "educated unemployment"," Journal of Development Economics, Elsevier, vol. 83(1), pages 76-87, May.
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    7. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October.
    8. Stark, Oded, 2004. "Rethinking the Brain Drain," World Development, Elsevier, vol. 32(1), pages 15-22, January.
    9. Galor, Oded & Stark, Oded, 1994. "Migration, Human Capital Formation, and Long-Run Output," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 59-68.
    10. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-122, April.
    11. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
    12. Steve Boucher & Oded Stark & J. Edward Taylor, 2009. "A Gain with a Drain? Evidence from Rural Mexico on the New Economics of the Brain Drain," International Economic Association Series, in: János Kornai & László Mátyás & Gérard Roland (ed.), Corruption, Development and Institutional Design, chapter 6, pages 100-119, Palgrave Macmillan.
    13. Howard Davies, 2005. "Trade in the Chinese 21st Century," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 6(1), pages 1-13, January.
    14. Oded Stark, 2005. "The New Economics of the Brain Drain," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 6(2), pages 137-140, April.
    15. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
    16. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
    17. Eric A. Hanushek, 1996. "Measuring Investment in Education," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 9-30, Fall.
    18. Stark, Oded & Wang, Yong, 2002. "Inducing human capital formation: migration as a substitute for subsidies," Journal of Public Economics, Elsevier, vol. 86(1), pages 29-46, October.
    19. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 501-526.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Oded Stark & Roman Zakharenko, 2012. "Differential Migration Prospects, Skill Formation, and Welfare," Review of International Economics, Wiley Blackwell, vol. 20(4), pages 657-673, September.
    2. Hung-Ju Chen & Xiangbo Liu, 2015. "International Migration, Skill Acquisition and Matching Frictions," Economics Bulletin, AccessEcon, vol. 35(3), pages 1469-1476.
    3. Pille Motsmees & Jaan Masso & Raul Eamets, 2013. "The Effect of Migration Experience on Occupational Mobility in Estonia," Discussion Papers 14, Central European Labour Studies Institute (CELSI).
    4. Katarzyna Budnik, 2011. "Emigration Triggers: International Migration of Polish Workers between 1994 and 2009," NBP Working Papers 90, Narodowy Bank Polski.
    5. Stark, Oded & Byra, Lukasz & Casarico, Alessandra & Uebelmesser, Silke, 2017. "A critical comparison of migration policies: Entry fee versus quota," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 91-107.
    6. Schiff, Maurice, 2005. "Brain Gain: Claims about Its Size and Impact on Welfare and Growth Are Greatly Exaggerated," IZA Discussion Papers 1599, Institute of Labor Economics (IZA).
    7. Byra, Lukasz, 2013. "Rethinking the brain drain: Dynamics and transition," International Review of Economics & Finance, Elsevier, vol. 28(C), pages 19-25.
    8. Jaan Masso & Raul Eamets & Pille Mõtsmees, 2013. "The Effect of Temporary Migration Experience on Occupational Mobility in Estonia," CESifo Working Paper Series 4322, CESifo.
    9. repec:ilo:ilowps:486992 is not listed on IDEAS
    10. Muhammad Ali & Abiodun Egbetokun & Manzoor Hussain Memon, 2018. "Human Capital, Social Capabilities and Economic Growth," Economies, MDPI, vol. 6(1), pages 1-18, January.
    11. Vesna Andrijevic Matovac & Vlatka Bilas & Sanja Franc, 2010. "Understanding The Importance Of Human Capital And Labor Market Competitiveness In The Eu Candidate Countries And Selected Eu Members," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 19(2), pages 359-382, december.
    12. repec:ilo:ilowps:486369 is not listed on IDEAS
    13. Stark, Oded & Casarico, Alessandra & Devillanova, Carlo & Uebelmesser, Silke, 2012. "On the formation of international migration policies when no country has an exclusive policy-setting say," Regional Science and Urban Economics, Elsevier, vol. 42(3), pages 420-429.
    14. João Ribeiro Butiam Có, 2009. "Teorias e dinâmicas migratórias internacionais: algumas experiências africanas de "brain drain","brain circulation" e "brain gain"," Working Papers wp022009, SOCIUS, Research Centre in Economic and Organisational Sociology at the School of Economics and Management (ISEG) of the University of Lisbon.
    15. Bang, James T. & Mitra, Aniruddha, 2011. "Brain drain and institutions of governance: Educational attainment of immigrants to the US 1988-1998," Economic Systems, Elsevier, vol. 35(3), pages 335-354, September.
    16. Franc Sanja & Časni Anita Čeh & Barišić Antea, 2019. "Determinants of Migration Following the EU Enlargement: A Panel Data Analysis," South East European Journal of Economics and Business, Sciendo, vol. 14(2), pages 13-22, December.
    17. Zhang, Yi & Matz, Julia Anna, 2017. "On the train to brain gain in rural China," Discussion Papers 252443, University of Bonn, Center for Development Research (ZEF).
    18. Hera Susanti & Arie Damayanti, 2015. "Determinants of Internal Migration in Indonesia," Working Papers in Economics and Business 201505, Faculty of Economics and Business, University of Indonesia, revised Oct 2015.
    19. Amir Mousavi & Jeremy Clark, 2021. "The effects of natural resources on human capital accumulation: A literature survey," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1073-1117, September.
    20. Makulec, Agnieszka., 2014. "Philippines' bilateral labour arrangements on health-care professional migration : in search of meaning," ILO Working Papers 994869923402676, International Labour Organization.

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    More about this item

    Keywords

    Brain drain; human capital formation; externalities; economic growth; social welfare;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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