Is Migration a Good Substitute for Education Subsidies ?

33 Pages Posted: 20 Apr 2016

See all articles by Ousmane Faye

Ousmane Faye

CEPS/INSTEAD

Pierre Pestieau

University of Liège - Research Center on Public and Population Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: May 1, 2008

Abstract

Assuming a given educational policy, the recent brain drain literature reveals that skilled migration can boost the average level of schooling in developing countries. This paper introduces educational subsidies determined by governments concerned by the number of skilled workers remaining in the country. The theoretical analysis shows that developing countries can benefit from skilled emigration when educational subsidies entail high .fiscal distortions. However when taxes are not too distortionary, it is desirable to impede emigration and subsidize education. The authors investigate the empirical relationship between educational subsidies and migration prospects, obtaining a negative relationship for 105 countries. Based on this result, the analysis revisits the country specific effects of skilled migration upon human capital. The findings show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses.

Keywords: Population Policies, Economic Theory & Research, Access to Finance, International Migration, Emerging Markets

Suggested Citation

Faye, Ousmane and Pestieau, Pierre, Is Migration a Good Substitute for Education Subsidies ? (May 1, 2008). World Bank Policy Research Working Paper No. 4614, Available at SSRN: https://ssrn.com/abstract=1149117

Ousmane Faye

CEPS/INSTEAD ( email )

3, Avenue de la Fonte
Esch-sur-Alzette, L-4364
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00352585855 (Phone)

HOME PAGE: http://www.ceps.lu

Pierre Pestieau

University of Liège - Research Center on Public and Population Economics ( email )

Boulevard du Rectorat, 7, Batiment 31
Sart-Tilman
B-4000 Liege, 4000
Belgium
+32 4 366 3108 (Phone)
+32 4 366 3106 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Vopie Roman Pays
Louvain la Neuve
Belgium

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