Does Brain Drain Lead to Institutional Gain?

19 Pages Posted: 12 Jul 2017

See all articles by Xiaoyang Li

Xiaoyang Li

Deakin University

John McHale

Smith School of Business

Xuan Zhou

Renmin University of China

Multiple version iconThere are 2 versions of this paper

Date Written: July 2017

Abstract

A country's endowment of human capital affects its institutions through various channels. This raises the possibility that skilled emigration can leave its mark on a country's institutional development. We explore the impact of emigrant human capital on home country's institutional quality. Using geographical and genetic distanceā€based instrumental variables for emigration and a dynamic panel estimation method, we find that human capital emigration helps the home country's political institutions, but hurts economic institutions. The conventional 'brain drain' argument, therefore, needs to incorporate the institutional changes due to skilled labour emigration.

Suggested Citation

Li, Xiaoyang and McHale, John and Zhou, Xuan, Does Brain Drain Lead to Institutional Gain? (July 2017). The World Economy, Vol. 40, Issue 7, pp. 1454-1472, 2017. Available at SSRN: https://ssrn.com/abstract=3000640 or http://dx.doi.org/10.1111/twec.12407

Xiaoyang Li (Contact Author)

Deakin University ( email )

75 Pigdons Road
Victoria, Victoria 3216
Australia

John McHale

Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Xuan Zhou

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

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