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 Brain Drain and the World Distribution of Income

Andrew Mountford

and

Hillel Rapoport


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).


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


Andrew Mountford

Differential Fertility Patterns


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)


Andrew Mountford


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)


Andrew Mountford


• 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


Andrew Mountford

Patents in Force by Country of Origin


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


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


Andrew Mountford


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


Andrew Mountford


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


Andrew Mountford

Fertility and the Brain Drain: -Cross Country Evidence


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


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


Andrew Mountford

Education and the Brain Drain: -Cross Country Evidence


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


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


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


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?


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


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Why Might Growth Rates Differ

• International Trade (Galor –Mountford)

• Institutions (Acemoglu et al )

• Non-Convexities in Growth equation

• The Brain Drain (Perotti)


Andrew Mountford


Andrew Mountford


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


Future World Income Distribution


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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


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Evolution of World Income Distribution with No Migration

0.1

.2.3

.4.5

.6Fr

actio

n


Initial World Income Distribution

0.1

.2.3

.4.5

.6Fr

actio

n


Future World Income Distribution


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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

Documents

ESL International Conference, UCL, Louvain-la-Neuve Andrew Mountford The Brain Drain and the World Distribution of Income Andrew Mountford and Hillel Rapoport