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BRAIN DRAIN IN GLOBALIZATION: A GENERAL EQUILIBRIUM ANALYSIS FROM THE SENDING COUNTRIES' PERSPECTIVE

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According to the economic literature, high‐skilled emigration may either harm or benefit developing economies. Recent research highlighted several positive and negative channels through which the brain drain operates. This paper aims at evaluating the relative magnitudes of various brain drain channels and quantifying their global impact on migrants' sending countries. For this purpose, we develop a 10‐region general equilibrium model of the world economy characterized by overlapping‐generations dynamics. Our findings suggest that the short‐run impact of brain drain on resident human capital is extremely crucial, as it affects not only the number of high‐skilled workers available to domestic production, but also the sending economy's capacity to innovate/adopt modern technologies. This latter effect is particularly important in globalization, where capital investments are made in places with high production efficiencies. Hence, despite positive feedback effects, those countries facing prevalent high‐skilled emigration are the most candid victims to brain drain. (JEL F22, J24, O57)
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Document Type: Research Article

Affiliations: 1: ; 2: Research Group, The Milken Institute, Santa Monica, CA 90401; IRES, Université catholique de Louvain, Louvain-La-Neuve B-1348, Belgium; Institute for the Study of Labor (IZA), Bonn, Germany. Phone (310) 570-4643, Fax: (310) 570-4625 3: IRES, Université catholique de Louvain, Louvain-La-Neuve B-1348, Belgium; Fonds National de la Recherche Scientifique (FNRS), Brussels, Belgium. Phone +32 10 47 41 49, Fax: +32 10 47 39 45

Publication date: April 1, 2013

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