BRAIN DRAIN IN GLOBALIZATION: A GENERAL EQUILIBRIUM ANALYSIS FROM THE SENDING COUNTRIES' PERSPECTIVE |
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| Authors: | LUCA MARCHIORI I‐LING SHEN FRÉDÉRIC DOCQUIER |
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| Institution: | 1. Marchiori: Economics and Research Department, Central Bank of Luxembourg, Luxembourg L‐2983, Luxembourg;2. IRES, Université catholique de Louvain, Louvain‐La‐Neuve B‐1348, Belgium. Phone +352 4774 4557, Fax +352 4774 4920, E‐mail luca.marchiori@bcl.lu;3. marchioriluca@gmail.com;4. Shen: Research Group, The Milken Institute, Santa Monica, CA 90401;5. IRES, Université catholique de Louvain, Louvain‐La‐Neuve B‐1348, Belgium;6. Institute for the Study of Labor (IZA), Bonn, Germany. Phone (310) 570‐4643, Fax (310) 570‐4625, E‐mail ishen@milkeninstitute.org |
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| Abstract: | According to the economic literature, high‐skilled emigration may either harm or benefit developing economies. Recent research highlighted several positive and negative channels through which the brain drain operates. This paper aims at evaluating the relative magnitudes of various brain drain channels and quantifying their global impact on migrants' sending countries. For this purpose, we develop a 10‐region general equilibrium model of the world economy characterized by overlapping‐generations dynamics. Our findings suggest that the short‐run impact of brain drain on resident human capital is extremely crucial, as it affects not only the number of high‐skilled workers available to domestic production, but also the sending economy's capacity to innovate/adopt modern technologies. This latter effect is particularly important in globalization, where capital investments are made in places with high production efficiencies. Hence, despite positive feedback effects, those countries facing prevalent high‐skilled emigration are the most candid victims to brain drain. (JEL F22, J24, O57) |
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