Consumers and the Brain Drain: Product Design and the Gains from Emigration

17 Pages Posted: 4 Aug 2008

See all articles by Peter Kuhn

Peter Kuhn

University of California, Santa Barbara (UCSB) - Department of Economics; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Carol McAusland

University of British Columbia (UBC)

Abstract

We consider the welfare effects of skilled worker emigration in a context where skilled labor plays a role in product design. We show such emigration can benefit the residents left behind, even when consumers' tastes exhibit a form of home bias. This is because emigration improves the design of goods designed by skilled emigrants but consumed in the sending country. In contrast to existing models of beneficial brain drain, our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration "lottery". Instead, they are driven purely by differences in market size that induce skilled emigrants to design better products abroad than at home.

Keywords: brain drain, international labor migration, product quality

JEL Classification: F22, J6, O34

Suggested Citation

Kuhn, Peter J. and McAusland, Carol, Consumers and the Brain Drain: Product Design and the Gains from Emigration. IZA Discussion Paper No. 3602. Available at SSRN: https://ssrn.com/abstract=1184012 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Peter J. Kuhn (Contact Author)

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

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Santa Barbara, CA 93106
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IZA Institute of Labor Economics

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Germany

National Bureau of Economic Research (NBER)

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Carol McAusland

University of British Columbia (UBC) ( email )

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Vancouver, British Columbia BC V6T 1Z4
Canada

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