Global Competition for Attracting Talents and the World Economy

13 Pages Posted: 14 Apr 2016

See all articles by Frédéric Docquier

Frédéric Docquier

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

Joel Machado

Luxembourg Institute of Socio-Economic Research (LISER); Universite du Luxembourg - Faculty of Law, Economics and Finance

Date Written: April 2016

Abstract

This paper studies the effect of liberalising the international mobility of college‐educated workers on the world economy. First, we combine data on effective and desired migration to identify the net pool of foreign talents (NPFT) of selected high‐income countries. So far, the EU‐15 has poorly benefited from its NPFT while the US has mobilised a large portion of it. Second, we use a micro‐founded model to simulate the effects of skill‐selective liberalisation shocks. In our benchmark model, a worldwide liberalisation induces larger long‐run income gains for the EU‐15 (+8.8 per cent) than for the US (+5.9 per cent). However, less attractive EU countries such as Austria, Belgium, Germany, Greece, Luxembourg and the Netherlands benefit less than the US. In addition, liberalising high‐skilled migration decreases income per worker by 2.5 per cent in developing countries. Overall, it increases efficiency (+6.2 per cent in the worldwide average level of income per capita) and inequality (+1.2 percentage points in the Theil inequality index). Much greater effects can be obtained if total factor productivity varies with human capital.

Suggested Citation

Docquier, Frédéric and Machado, Joel, Global Competition for Attracting Talents and the World Economy (April 2016). The World Economy, Vol. 39, Issue 4, pp. 530-542, 2016. Available at SSRN: https://ssrn.com/abstract=2764586 or http://dx.doi.org/10.1111/twec.12267

Frédéric Docquier (Contact Author)

Université catholique de Louvain ( email )

IRES
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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

Joel Machado

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

162a, avenue de la Faïencerie
Luxembourg-Limpertsberg, L-1511
Luxembourg

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