esl international conference, ucl, louvain-la-neuve andrew mountford the brain drain and the world...
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ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
The Brain Drain and the World Distribution of Income
Andrew Mountford
and
Hillel Rapoport
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
The Evolution of the World Distribution of Income • Depends on both on the growth of income per capita and the
growth of population across countries • A large literature on the determinants of differences in the rate
of growth of income per capita, • Smaller literature on relationship between differential fertility
rates and economic growth - with Galor and Weil (1999, 2000) Galor and Moav (2002), Kremer and Chen (2002). De la Croix and Doepke (2003, 2004, 2006) and Moav (2005) being notable exceptions.
• Contribution of this paper is to analyse the effect of skilled migration on both economic growth and fertility. Emphasis is on international influences and is thus related to Galor and Mountford (2005).
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Salient Stylized Facts
• Differential Fertility across economies
• Concentration of R&D
• Increasing Flow of Skilled Workers Migrating to Developed Economies from Less Developed Economies
• Evidence of Fertility and Human Capital Responding to Economic Forces
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Differential Fertility Patterns
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Growth of Brain Drain Migration
Introduction of `Points-System’ immigration policies in many OECD countries – Australia and Canada in 1980s– US 1990 Immigration created specific visas
(H1B’s) for High Skilled Workers– Various EU economies (See OECD (2002))– (UK 2006)
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Growth of Brain Drain Migration
Individual Studies on Immigrants
– Chiquiar and Hanson (2002)
(Mexican Immigrants to US)
– Borjas (2005)
(Non-Resident Aliens 50% Engineering PhDs in US )
– Dustmann, Fabbri, Preston Wadsworth (2005)
(21% Immigrants in UK are graduates compared to 16% for UK born whites)
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Growth of Brain Drain Migration
• See Docquier and Defoort (2005)
By region 1975 1980 1985 1990 1995 2000
AMERICA 2.0% 2.0% 2.5% 2.6% 2.7% 3.1%
EUROPE 6.1% 6.2% 5.8% 5.3% 4.5% 5.6%
AFRICA 7.3% 7.5% 9.2% 8.9% 9.0% 9.2%
ASIA 3.8% 4.2% 4.8% 4.7% 4.8% 5.1%
OCEANIA 3.7% 3.8% 4.6% 4.5% 5.4% 6.1%
Skilled emigration rates
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Patents in Force by Country of Origin
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Do Fertility and Human Capital Accumulation Respond to Skilled Migration?
Here we present (Very Preliminary) empirical evidence
that shows that Brain Drain propensity • Reduces Fertility in sending economies
• Increases primary education in sending economies but on average reduces higher education
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Fertility and the Brain Drain: -
Cross Country Evidence totalfert90
logrgdppc1985 -1.527(0.146)***
bd090 -0.832(0.437)**
logfrankrom
infmort85
Constant 16.106(1.023)***
Observations 105R-squared 0.59
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Fertility and the Brain Drain: -
Cross Country Evidence totalfert90 totalfert90
logrgdppc1985 -1.527 -1.634(0.146)*** (0.136)***
bd090 -0.832 -1.591(0.437)** (0.473)***
logfrankrom 0.636(0.151)***
infmort85
Constant 16.106 15.182(1.023)*** (1.063)***
Observations 105 105R-squared 0.59 0.644
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Fertility and the Brain Drain: -
Cross Country Evidence totalfert90 totalfert90 totalfert90
logrgdppc1985 -1.527 -1.634 -0.405(0.146)*** (0.136)*** (0.225)*
bd090 -0.832 -1.591 -0.664(0.437)** (0.473)*** (0.432)*
logfrankrom 0.636 0.492(0.151)*** (0.107)***
infmort85 0.028(0.004)***
Constant 16.106 15.182 4.191(1.023)*** (1.063)*** (2.010)**
Observations 105 105 105R-squared 0.59 0.644 0.776
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Fertility and the Brain Drain: -Cross Country Evidence
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Education and the Brain Drain: -
Cross Country Evidence penrol91 penrol91 penrol85
logrgdppc1985 16.55 17.827 0.175
(2.363)*** (2.417)*** (0.022)***
bd090 11.674 20.034 0.112
(8.171)* (9.112)*** (0.083)*
logfrankrom -7.033 -0.044
(2.967)** (0.026)*
Constant -37.623 -28.128 -0.372
(18.588)** -18.664 (0.169)**
Observations 100 100 84
R-squared 0.36 0.394 0.446
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Education and the Brain Drain: -
Cross Country Evidence senrol85 henrol85 lu1590
logrgdppc1985 0.241 0.068 -22.129(0.019)*** (0.010)*** (1.978)***
bd090 0.076 -0.081 -22.995-0.079 (0.034)** (9.038)**
logfrankrom -0.002 -0.025 9.029-0.026 (0.014)* (2.329)***
Constant -1.427 -0.336 179.989(0.147)*** (0.072)*** (15.695)***
Observations 83 86 76R-squared 0.707 0.423 0.61
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Education and the Brain Drain: -Cross Country Evidence
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Has Brain Drain Been Good For GrowthEconomies with small emigration rates (Typically large economies): Source Beine, Docquier and Rapoport (2006)
ARG
BGD
BRA
CHN COL
ZAR
EGY
ETH
INDIDN
IRNMEX
BUR
NGAPAK
PHL
ZAF
THA
TUR
VNM
-1-.
50
.51
1.5
Bra
inG
ain
0 .05 .1 .15 .2 .25Em Rate
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Has Brain Drain Been Good For GrowthEconomies with Large emigration rates (Typically small economies): Source Beine, Docquier and Rapoport (2006)
ATG
BHR
BRBBLZ
CPV
DJI
DMA
GNQ
FJI
GAB
GRD
GNB
GUY
KIR
MDV
MHLFSM
PLW
KNA
LCA
VCT
WSM
STP
SYC
SLB
SUR
TON
VUT
-20
-15
-10
-50
Bra
inG
ain
0 .2 .4 .6 .8 1Em Rate
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Has Brain Drain Been Good For GrowthMid-Size: Source Beine, Docquier and Rapoport (2006)
AFG
ALB
DZAAGOBENBTN
BOLBWABGRBFA BDI
KHMCMRCAFTCDCHL
COG
CRI
CIV
CUB
DOM
ECU
SLV
GMBGHAGTMGIN
HTI
HNDHUNIRQ
JAM
JOR
KEN
LAO
LEB
LSO
LBR
LBY
MDG MWI MYSMLIMRT
MUS
MNG
MAR MOZNAMNPL
NIC
NER
OMN
PAN PNG
PRYRWA
SAU
SENSLESOM LKA
SDNSWZ SYR
TZATGO
TTO
TUN UGAURY
VEN
YEM ZMBZWE
-15
-10
-50
Bra
inG
ain
0 .2 .4 .6 .8Em Rate
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Theoretical Model Designed to Answers the Questions
• Why do economies with low levels of skilled labor and high levels of fertility send skilled workers to economies with a higher levels of skilled labor and low fertility?
• Is the phenomenon of Brain Drain emigration likely to be a transitory or a permanent feature of the world economy?
• Will this Brain Drain migration increase the rate of economic growth in the receiving economies? And in the sending economies?
• Will the Brain Drain promote convergence or divergence in the world distribution of income?
• Should the sending or receiving economies try to stop or limit this flow of people?
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Theoretical Model
• OLG Model based on Galor and Moav (2000) extended to include fertility decisions and migration
• Agents make optimal fertility and human capital accumulation decisions
• Central idea is that the rate of growth of technology is skilled biased while the level of technology is neutral
• International diffusion of technology is regarded as a level effect and is thus is not skill biased
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Why Might Growth Rates Differ
• International Trade (Galor –Mountford)
• Institutions (Acemoglu et al )
• Non-Convexities in Growth equation
• The Brain Drain (Perotti)
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Evolution of World Income Distribution with No Migration
0.1
.2.3
.4.5
.6Fr
actio
n
0 25 50 75 100 125 150 175Wage Relative to Advanced Unskilled Wages
Initial World Income Distribution
0.1
.2.3
.4.5
.6Fr
actio
n
0 25 50 75 100 125 150 175Wage Relative to Advanced Unskilled Wages
Future World Income Distribution
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Evolution of Skill Intensity in Sending and Receiving Economy: Scenario #1
.51
.515
.52
.525
.53h
0 5 10 15 20 25Time
Skill Intensity in Receiving Economy
.2.2
1.2
2.2
3h
0 5 10 15 20 25Time
Skill Intensity in Sending Economy
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Evolution of Skill Intensity in Sending and Receiving Economy: Scenario #2
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Evolution of Skill Intensity in Sending and Receiving Economy: Scenario #3
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Evolution of World Income Distribution with No Migration
0.1
.2.3
.4.5
.6Fr
actio
n
0 25 50 75 100 125 150 175Wage Relative to Advanced Unskilled Wages
Initial World Income Distribution
0.1
.2.3
.4.5
.6Fr
actio
n
0 25 50 75 100 125 150 175Wage Relative to Advanced Unskilled Wages
Future World Income Distribution
ESL International Conference, UCL, Louvain-la-Neuve
Andrew Mountford
Conclusions
• Even if there is convergence or stability in the world distribution of income per capita there are good reasons for believing that the world distribution of income will diverge due differences in population growth between rich and poor economies
• The current trend towards skilled migration from poor to rich economies increases the potential for divergence