Differential Migration Prospects, Skill Formation, and Welfare

ZEF- Discussion Papers on Development Policy No. 160

28 Pages Posted: 20 Dec 2011

See all articles by Oded Stark

Oded Stark

University of Bonn; University of Warsaw; University of Tuebingen

Roman Zakharenko

National Research University Higher School of Economics (Moscow)

Date Written: December 1, 2011

Abstract

This paper develops a one sector, two-input model with endogenous human capital formation. The two inputs are two types of skilled labor: “engineering,” which exerts a positive externality on total factor productivity, and “law,” which does not. The paper shows that a marginal prospect of migration by engineers increases human capital accumulation of both types of workers (engineers and lawyers), and also the number of engineers who remain in the country. These two effects are socially desirable, since they move the economy from the (inefficient) free-market equilibrium towards the social optimum. The paper also shows that if the externality effect of engineering is sufficiently powerful, everyone will be better off as a consequence of the said prospect of migration, including the engineers who lose the migration “lottery,” and even the individuals who practice law.

Keywords: Heterogeneous human capital, Differential externality effects, Migration of educated workers, Human capital formation, Efficient acquisition of human capital, Beneficial brain drain

JEL Classification: F22, J61, R23

Suggested Citation

Stark, Oded and Zakharenko, Roman, Differential Migration Prospects, Skill Formation, and Welfare (December 1, 2011). ZEF- Discussion Papers on Development Policy No. 160, Available at SSRN: https://ssrn.com/abstract=1974530

Oded Stark (Contact Author)

University of Bonn

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

University of Warsaw

Dluga Street 44/50
Warsaw, 00-241
Poland

University of Tuebingen

Wilhelmstr. 19
Tuebingen, Baden Wuerttemberg 72074
Germany

Roman Zakharenko

National Research University Higher School of Economics (Moscow) ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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