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Brain drain in globalization A general equilibrium analysis from the sending countries’ perspective
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Brain drain in globalization A general equilibrium analysis from the sending countries’ perspective

Author

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  • Luca MARCHIORI

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and UNIVERSITY OF LUXEMBOURG, Faculty of Law, Economics and Finance)

  • I-Ling SHEN

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), UNIVERSITY OF GENEVA, Department of Econometrics and Institute for the Study of Labor (IZA))

  • Frederic DOCQUIER

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES), Belgian National Fund of Scientific Research and Institute for the Study of Labor (IZA))

Abstract

The paper assesses the global effects of brain drain on developing economies and quantifies the relative sizes of various static and dynamic impacts. By constructing a unified generic framework characterized by overlapping generations dynamics and calibrated to real data, this study incorporates many direct impacts of brain drain whose interactions, along with other indirect effects, are endogenously and dynamically generated. Our findings suggest that the short-run impact of brain drain on resident human capital is extremely crucial, as it does not only determine the number of skilled workers available to domestic production, but it also affects the sending economy’s capacity to innovate or to adopt modern technologies. The latter impact plays an important role particularly in a globalized economy where capital investments are made in places with higher production efficiencies ceteris paribus. Hence, in spite of several empirically documented positive feedback effects, those countries with high skilled emigration rates are the most candid victims to brain drain since they are least likely to benefit from the “brain gain” effect, and thus suffering from declines of their resident human capital.

Suggested Citation

  • Luca MARCHIORI & I-Ling SHEN & Frederic DOCQUIER, 2009. "Brain drain in globalization A general equilibrium analysis from the sending countries’ perspective," LIDAM Discussion Papers IRES 2009013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2009013
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    2. Vladimir Borgy & Xavier Chojnicki & Gilles Le Garrec & Cyrille Schwellnus, 2010. "Macroeconomic Consequences of Global Endogenous Migration: a General Equilibrium Analysis," Annals of Economics and Statistics, GENES, issue 97-98, pages 13-39.
    3. Małgorzata Walerych, 2024. "The aggregate and redistributive effects of emigration," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(1), pages 99-143, February.
    4. Harald Fadinger & Karin Mayr, 2014. "Skill-Biased Technological Change, Unemployment, And Brain Drain," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 397-431, April.
    5. Anthony Orji & Chukwuma Agu, 2018. "Analysis of Migration, Regional Characteristics, and Socioeconomic Outcomes in Developing Economies: Empirical Evidence from Nigeria," Journal of International Migration and Integration, Springer, vol. 19(3), pages 565-581, August.
    6. Dustmann, Christian & Glitz, Albrecht, 2011. "Migration and Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 327-439, Elsevier.
    7. Duarte Leite & Óscar Afonso & Sandra Silva, 2014. "A tale of two countries: a directed technical change approach," FEP Working Papers 539, Universidade do Porto, Faculdade de Economia do Porto.
    8. Nejad, Maryam Naghsh & Young, Andrew T., 2016. "Want freedom, will travel: Emigrant self-selection according to institutional quality," European Journal of Political Economy, Elsevier, vol. 45(S), pages 71-84.
    9. Bennett, Daniel & Nikolaev, Boris & Aidt, Toke, 2016. "Institutions & Well-being," MPRA Paper 78436, University Library of Munich, Germany.
    10. 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).
    11. Leite, Duarte N. & Afonso, Óscar & Silva, Sandra T., 2019. "A tale of two countries: Directed technical change, trade and migratory movements," Economic Modelling, Elsevier, vol. 83(C), pages 173-194.
    12. Andrea Caragliu & Peter Nijkamp, 2013. "From Islands to Hubs of Innovation: Connecting Innovative Regions," Tinbergen Institute Discussion Papers 13-141/VIII, Tinbergen Institute.
    13. George-Laurentiu Serban-Oprescu & Liana Badea & Isabel Novo-Corti & Mihaela Roberta Stanef & Silvia Elena Iacob & Grigore Ioan Pirosca, 2021. "Socio-Psychological Dimensions of Students Migration. A Pilot Study," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(Special15), pages 1015-1015, November.
    14. Ted Davis & David M. Hart, 2010. "International Cooperation to Manage High‐Skill Migration: The Case of India–U.S. Relations," Review of Policy Research, Policy Studies Organization, vol. 27(4), pages 509-526, July.
    15. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
    16. Okoye, Dozie, 2016. "Can brain drain be good for human capital growth? Evidence from cross-country skill premiums and education costs," Economic Analysis and Policy, Elsevier, vol. 49(C), pages 74-99.
    17. Docquier, Frédéric & Marchiori, Luca, 2012. "The impact of MENA-to-EU migration in the context of demographic change," Journal of Pension Economics and Finance, Cambridge University Press, vol. 11(2), pages 243-284, April.
    18. Harald Fadinger & Karin Mayr, 2014. "Skill-Biased Technological Change, Unemployment, And Brain Drain," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 397-431, April.
    19. Elisabetta Lodigiani & Luca Marchiori & I-Ling Shen, 2016. "Revisiting the Brain Drain Literature with Insights from a Dynamic General Equilibrium World Model," The World Economy, Wiley Blackwell, vol. 39(4), pages 557-573, April.
    20. Arends-Kuenning, Mary P. & Calara, Alvaro & Go, Stella, 2015. "International Migration Opportunities and Occupational Choice: A Case Study of Philippine Nurses 2002 to 2014," IZA Discussion Papers 8881, Institute of Labor Economics (IZA).
    21. Sharma, Hari, 2020. "The effect of emigration and remittances on labour supply of the left-behind: Evidence from Nepal," MPRA Paper 102091, University Library of Munich, Germany.
    22. Iryna Shopina & Olena Oliinyk & Valerii Finaheiev, 2017. "Globalization And Its Negative Impact On The Global Economy," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 3(5).
    23. Vikhrov Dmytro, 2013. "Welfare Effects of Labor Migration," CERGE-EI Working Papers wp491, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

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    More about this item

    Keywords

    Brain Drain; Capital Flow; Development; Human Capital; Remittances;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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