The brain drain, 'educated unemployment', human capital formation, and economic betterment

Chengze, Simon FAN, Oded STARK

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

20 Citations (Scopus)

Abstract

Extending both the 'harmful brain drain' literature and the 'beneficial brain gain' literature, this paper analyzes both the negative and the positive impact of migration by skilled individuals in a unified framework. The paper extends the received literature on the 'harmful brain drain' by showing that in the short run, international migration can result in 'educated unemployment' and overeducation in developing countries, as well as a brain drain from these countries. A simulation suggests that the costs of 'educated unemployment' and overeducation can amount to significant losses for the individuals concerned, who may constitute a substantial proportion of the educated individuals. Adopting a dynamic framework, it is then shown that due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation in migration policy in both the current period and the preceding period can facilitate 'take-off' of a developing country in the current period. Thus, it is suggested that while the migration of some educated individuals may reduce the social welfare of those who stay behind in the short run, it improves it in the long run.
Original languageEnglish
Pages (from-to)629-660
Number of pages32
JournalEconomics of Transition
Volume15
Issue number4
DOIs
Publication statusPublished - 1 Oct 2007

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Unemployment
Human capital formation
Economics
Brain drain
Overeducation
Human capital
Short-run
Developing countries
Positive externalities
Costs
Proportion
Brain gain
Endowments
Simulation
Social welfare
Migration policy
International migration

Cite this

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abstract = "Extending both the 'harmful brain drain' literature and the 'beneficial brain gain' literature, this paper analyzes both the negative and the positive impact of migration by skilled individuals in a unified framework. The paper extends the received literature on the 'harmful brain drain' by showing that in the short run, international migration can result in 'educated unemployment' and overeducation in developing countries, as well as a brain drain from these countries. A simulation suggests that the costs of 'educated unemployment' and overeducation can amount to significant losses for the individuals concerned, who may constitute a substantial proportion of the educated individuals. Adopting a dynamic framework, it is then shown that due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation in migration policy in both the current period and the preceding period can facilitate 'take-off' of a developing country in the current period. Thus, it is suggested that while the migration of some educated individuals may reduce the social welfare of those who stay behind in the short run, it improves it in the long run.",
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The brain drain, 'educated unemployment', human capital formation, and economic betterment. / FAN, Chengze, Simon; STARK, Oded.

In: Economics of Transition, Vol. 15, No. 4, 01.10.2007, p. 629-660.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

TY - JOUR

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AU - STARK, Oded

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AB - Extending both the 'harmful brain drain' literature and the 'beneficial brain gain' literature, this paper analyzes both the negative and the positive impact of migration by skilled individuals in a unified framework. The paper extends the received literature on the 'harmful brain drain' by showing that in the short run, international migration can result in 'educated unemployment' and overeducation in developing countries, as well as a brain drain from these countries. A simulation suggests that the costs of 'educated unemployment' and overeducation can amount to significant losses for the individuals concerned, who may constitute a substantial proportion of the educated individuals. Adopting a dynamic framework, it is then shown that due to the positive externality effect of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation in migration policy in both the current period and the preceding period can facilitate 'take-off' of a developing country in the current period. Thus, it is suggested that while the migration of some educated individuals may reduce the social welfare of those who stay behind in the short run, it improves it in the long run.

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