published in: R. Baldwin and L. A. Winters (eds.), Challenges to Globalisation. NBER and University of Chicago Press, 2004
The migration of skilled individuals from developing countries has typically been considered
to be costly for the sending country, due to lost investments in education, high fiscal costs
and labour market distortions. Economic theory, however, raises the possibility of a beneficial
brain drain primarily through improved incentives to acquire human capital. Our survey of
empirical and theoretical work shows under what circumstances a developing country can
benefit from skilled migration. It argues that the sectoral aspects of migration and screening
of migrants in the receiving country are of major importance in determining the welfare
implications of the brain drain. These issues, as well as the size of the sending country,
duration of migration and the effect of diaspora populations, should be addressed in future
empirical work on skilled migration.
JEL
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