Brain Drain in Globalization: A General Equilibrium Analysis from the Sending Countries' Perspective

47 Pages Posted: 21 Jun 2009

See all articles by Luca Marchiori

Luca Marchiori

Catholic University of Louvain (UCL); Universite du Luxembourg

I-Ling Shen

Catholic University of Louvain (UCL); IZA Institute of Labor Economics

Frédéric Docquier

Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

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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.

Keywords: brain drain, capital flow, development, human capital, remittances

JEL Classification: F22, J24, O15

Suggested Citation

Marchiori, Luca and Shen, I-Ling and Docquier, Frédéric, Brain Drain in Globalization: A General Equilibrium Analysis from the Sending Countries' Perspective. IZA Discussion Paper No. 4207. Available at SSRN: https://ssrn.com/abstract=1423323

Luca Marchiori (Contact Author)

Catholic University of Louvain (UCL) ( email )

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

I-Ling Shen

Catholic University of Louvain (UCL) ( email )

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Frédéric Docquier

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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