Should I Stay or Should I Go? An Institutional Approach to Brain Drain

Institute for Empirical Research in Economics University of Zurich Working Paper No. 489

23 Pages Posted: 9 Jun 2010

See all articles by Lea Cassar

Lea Cassar

University of Cologne

Bruno S. Frey

CREMA; University of Basel

Date Written: June 2, 2010

Abstract

This paper suggests that institutional factors which reward social networks at the expenses of productivity can play an important role in explaining brain drain. The effects of social networks on brain drain are analyzed in a decision theory framework with asymmetric information. We distinguish between the role of insidership and personal connections. The larger the cost of being an outsider, the smaller is the number and the average ability of researchers working in the domestic job market. Personal connections partly compensate for this effect by attracting highly connected researchers back. However, starting from a world with no distortions, personal connections also increase brain drain.

Keywords: Brain drain, social networks, institutions, asymmetric information, Italian academia

JEL Classification: D82, F22, I20, J24, J44

Suggested Citation

Cassar, Lea and Frey, Bruno S., Should I Stay or Should I Go? An Institutional Approach to Brain Drain (June 2, 2010). Institute for Empirical Research in Economics University of Zurich Working Paper No. 489. Available at SSRN: https://ssrn.com/abstract=1621645 or http://dx.doi.org/10.2139/ssrn.1621645

Lea Cassar (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

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