‘BRAIN DRAIN’ OR ‘BRAIN GAIN’? HOW THE EMIGRATION OF SKILLED WORKERS CAN HELP POOR COUNTRIES’ DEVELOPMENT

The emigration of skilled workers from poor countries to rich countries is often viewed as a kind of predation through which the latter extract the most valuable human resources from the former. But according to new research by Michel Beine, Fréderic Docquier and Hillel Rapoport, a ‘brain drain’ may be more than compensated for by a ‘brain gain’ if the opportunities for skilled workers to emigrate to rich countries create an incentive for more people to become educated in poor countries.

Their study, which is published in the April 2008 issue of The Economic Journal, finds that some developing countries – including Brazil, China and India – benefit from the emigration of skilled workers. But others lose out, especially small countries in sub-Saharan Africa and Central America. Overall though, brain drain migration may be seen not only as increasing the number of skilled workers worldwide but also the number of such workers living in developing countries.

The brain drain has long been viewed as a serious constraint on poor countries’ development. But recent theoretical analysis suggests that migration prospects can foster investment in education at home.

The essence of the argument is that since the return to education is higher abroad, migration prospects can raise the expected return to human capital and, through this incentive effect, induce more people to invest in education and training. Under certain conditions, this incentive effect (or brain gain) can dominate that of actual emigration, in which case there is a net increase in human capital for the source country.

This study takes advantage of a recent data set on emigration rates by education levels in 127 developing countries to investigate this question empirically. Human capital is measured as the proportion of people with tertiary education in the population.

The researchers first estimate the effect of skilled migration prospects on gross (or pre-migration) human capital levels. They find that doubling the emigration rate of the highly skilled induces a 5% increase in gross human capital formation among the native population (residents and emigrants together). They also find that most countries that combine low levels of human capital and low migration rates of skilled workers end up with an overall positive effect.

In contrast, the brain drain appears to have negative effects in countries where the migration rate of the highly educated is above 20% and/or where the proportion of people with higher education is above 5%.

There appears to be more losers than winners, and the former tend to lose relatively more (that is, when the losses are expressed in proportion of the native skilled population) than what the latter gain. The situation of many small countries in Sub-Saharan Africa and Central America, in particular, is extremely worrisome.

In contrast, the main globalisers (such as Brazil, China and India) all seem to experience important gains in absolute terms (headcounts). On aggregate, the winners’ gains more than compensate the losers’ losses.

But given that there are winners and losers, the study shows that the brain drain has important distributional effects among developing countries, a dimension that has so far been absent from policy debates.

ENDS

Notes for editors: ‘Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers’ by Michel Beine, Fréderic Docquier and Hillel Rapoport is published in the April 2008 issue of The Economic Journal.

Michel Beine is at the University of Luxembourg. Fréderic Docquier is at the Catholic University of Louvain, Belgium. Hillel Rapoport is at Bar-Ilan University, Israel.

For further information:contact Michel Beine on +352 4666 4467 52 (email: michel.beine@uni.lu); Fréderic Docquier on +32 1047 4149 (email: frederic.docquier@uclouvain.be); Hillel Rapoport on +972 3531 8933 (email: hillel@mail.biu.ac.il); or Romesh Vaitilingam on 07768 661095 (email: romesh@compuserve.com).