South-Western College Publishing - Economics  
Brain Drain or Brain Gain?
Subject Emigration could be beneficial even for the home country
Topic Income distribution and poverty; Market failure, regulation and public choice
Key Words

brain drain, emigration, immigration, education, social benefits

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Reference ID: A138323725
News Story

Developing countries have long decried the “brain drain” involved when the countries’ best citizens leave for developed nations seeking higher salaries. This phenomenon has always been considered detrimental to the home country. But recent research suggests secondary effects that could outweigh the damage done when the “best and brightest” leave a country. This research flies in the face of conventional wisdom.

If the best and brightest from a country leave in search of higher incomes, it may induce other classmates to do the same. As a result, they may demand more education from their home countries. If the chances of getting a travel visa to a work in a developed country are limited, then it’s possible that this person who aspired to leave the country, but couldn’t. That person’s talents, honed by the better education and training, can then be used in the home country. The average education level for all workers thus rises as a result of people’s desire to emigrate.

Researchers base their results on the assumption that citizens of developing nations tend to demand too little education. Individuals of such countries probably see benefits to themselves of more education, but they do not see the overall benefits to society of increased education. As a result, society as a whole desires and needs a better-educated workforce, but individuals don’t have an incentive to get it. The notion of “managed emigration” can help alleviate this effect so that workers attain closer to the optimal educational level.

This all sounds good, but the key to this is to create a real “managed emigration” policy that rewards increased education, but does not guarantee a better paying job outside of the home country. India is typically touted as an example of the managed emigration notion--over a million of its citizens live and work in OECD nations. While this may seem like a huge number of Indian citizens, it amounts to only 4% of its total Indian college graduates. In contrast, Ghana sees 47% of its college-educated citizens in OECD nations, and Guyana sees 89% of its college graduates working in other nations.

Questions
1.

What social benefits accrue to increased education?

2. Suppose an individual moves from a rural area into an urbanized area to find a job. What happens to the average education level in the rural area?
3. Human capital theory suggests that education raises individual productivity levels. Is this theory of “managed emigration” consistent with that theory? Why or why not?
Source “Fruit that falls far from the tree.” The Economist. 3 November 2005. http://www.economist.com
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