Sunday, September 19, 2010

Consequences of high-skilled “brain drain”

This paper presents the results of innovative surveys which tracked academic high-achievers from five countries to wherever they moved in the world in order to directly measure at the micro level the channels through which high-skilled emigration affects the sending country. The results show that there are very high levels of emigration and of return migration among the very highly skilled; the income gains to the best and brightest from migrating are very large, and an order of magnitude or more greater than any other effect; there are large benefits from migration in terms of postgraduate education; most high-skilled migrants from poorer countries send remittances; but that involvement in trade and foreign direct investment is a rare occurrence. There is considerable knowledge flow from both current and return migrants about job and study opportunities abroad, but little net knowledge sharing from current migrants to home country governments or businesses. Finally, the fiscal costs vary considerably across countries, and depend on the extent to which governments rely on progressive income taxation.

More here. The study was done in Tonga, the Federated States of Micronesia, Papua New Guinea, Ghana, and New Zealand. The authors estimate that the best and the brightest gain US$40,000-75,000 per year from emigrating from these five countries. Gains disaggregated are: annual remittances are $2000-7000, trade and FDI effects are close to the remittances value, and annual fiscal impacts are at most $1000 for Tonga and Micronesia, $6000 for Ghana, $10,000 for New Zealand, and $17,000 for Papua New Guinea. They also find that migration leads to large increases in human capital of migrants, but little net knowledge transfers to home governments or business. The gains are estimated to be much higher relative to the magnitude of possible negative externalities.