Does Brain Drain Lead to Institutional Gain?

Abstract

A country’s endowment of human capital can affect its institutions through various channels. This raises the possibility that skilled emigration can leave its mark on a country’s institutional development. We combine recent datasets on emigrant stocks and institutional quality to explore the impacts of mobile human capital on home country’s institutional quality. Using geography-based instruments for emigrant human capital, we find that larger emigrant human capital stocks (as a share of domestic population) are associated with higher quality of political institutions, but lower quality of economics institutions.

Keywords: emigration, institution, human capital

JEL Classification: F22, O4