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
Date Written: June 2, 2010
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
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