Institutional Impact of the Brain Drain, Human Capital and Inequality: A Political Economy Analysis

Posted: 9 Oct 2010

See all articles by Maurice Schiff

Maurice Schiff

Fellow, Institute for the Study of Labor (IZA)

Frédéric Docquier

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

Date Written: October 6, 2010

Abstract

This paper examines the impact of the brain drain, human capital and inequality on institutions in a country where a rent-seeking elite levies a tax on the residents in migrants’ home country, and where skilled migrants and skilled and unskilled residents can affect the likelihood of regime change by voicing. With all impacts related to institutional quality, the main findings are: i) the impact of the brain drain m is U-shaped, with a maximum when the host country sets its immigration quota equal to zero (m=0); ii) the impact of human capital h is U-shaped as well, and it is U-shaped with respect m; iii) the likelihood institutional quality improves with human capital falls with both domestic and North-South inequality, and the likelihood it improves with the brain drain falls with North-South inequality; and v) a host country’s twin objectives of improving a high-brain-drain country’s institutions and reducing its brain drain cannot be achieved through a small reduction in its immigration quota, though it can be achieved with a sufficiently large reduction in it.

Keywords: rent-seeking, institutions, brain drain, human capital, inequality

JEL Classification: D64, D72, F22, J22

Suggested Citation

Schiff, Maurice W. and Docquier, Frédéric, Institutional Impact of the Brain Drain, Human Capital and Inequality: A Political Economy Analysis (October 6, 2010). Available at SSRN: https://ssrn.com/abstract=1688734

Maurice W. Schiff

Fellow, Institute for the Study of Labor (IZA) ( email )

Bonn
Germany

Frédéric Docquier (Contact Author)

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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