Rethinking the brain drain

This paper addresses the concerns voiced by the World Development Report about the exodus of trained workers from poorer countries. It turns this concern on its head and argues that the prospect of migration can well be harnessed to induce individuals to form a socially desirable level of human capital. The report maintains that compared to a closed economy, an economy open to migration differs not only in the opportunities that workers face but also in the structure of the incentives they confront; higher prospective returns to human capital in a foreign country impinge on human capital formation decisions at home.

The paper concludes that migration is in fact conducive to the formation of human capital. Thus, it casts migration as a harbinger of human capital gain, not as the culprit of human capital drain. An interesting implication of our perception of what migration entails is that the gains from migration to the home country accrue neither from migrants’ remittances nor from migrants’ return home with amplified skills acquired abroad.