The Lame Drain

39 Pages Posted: 22 Feb 2014

See all articles by Baomin Dong

Baomin Dong

Henan University; University of International Business and Economics (UIBE)

Shihe Fu

Xiamen University - The Wang Yanan Institute for Studies in Economics (WISE)

Jiong Gong

University of International Business and Economics (UIBE)

Hanwen Fan

University of International Business and Economics (UIBE)

Date Written: February 14, 2014

Abstract

This paper develops a signaling theory where brain drain as well as the opposite of brain drain, a phenomenon we call “lame-drain” can result. In particular, we assume there are three types of agents according to their intrinsic abilities; education (with endogenous intensity) consists of two stages: undergraduate and graduate. There are two types of jobs: entry level and managerial. It is shown that under some circumstances the equilibrium is semi-pooling where the medium type chooses to work after undergraduate education while (a fraction of) both high and low types pursue graduate studies at home and abroad. Some high and low ability students return to work in the indigenous country in equilibrium. However, our model differs from the traditional brain drain models in that some low ability agents also go abroad in equilibrium and work in the host country after graduation, resulting in the recipient country hiring low ability agents, a phenomenon we call lame-drain. We then provide empirical evidence that lame-drain is indeed happening using U.S. Census data.

Keywords: Brain Drain; Lame Drain; Signalling

JEL Classification: C72; F22; J61

Suggested Citation

Dong, Baomin and Fu, Shihe and Gong, Jiong and Fan, Hanwen, The Lame Drain (February 14, 2014). Available at SSRN: https://ssrn.com/abstract=2398971 or http://dx.doi.org/10.2139/ssrn.2398971

Baomin Dong

Henan University ( email )

85 Minglun St. Shunhe
Kaifeng, CA Henan 475001
China

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Shihe Fu (Contact Author)

Xiamen University - The Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 361005
China

Jiong Gong

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Hanwen Fan

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

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