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Global talent flows: Causes and consequences of high-skilled migration

Caglar Ozden's picture

Co-authors: Sari Kerr, William Kerr, and Chris Parsons

Highly skilled workers play a starring role in today’s knowledge economy. They make exceptional direct contributions, including breakthrough innovations. As teachers, policy makers, and entrepreneurs they guide the actions of others. They propel the knowledge frontier and spur economic growth. In this process the mobility of skilled workers, within and across national borders, becomes critical to enhancing productivity. Using newly available data, a recent paper by Kerr, Kerr, Özden, and Parsons reviews the landscape of global talent mobility and discusses the causes and consequences of highskilled migration.

Much attention has been paid to understanding the worldwide distribution of human capital and how global migration flows further tilt the deck against poor countries. The migration patterns we see today are the result of a complex tangle of firms and other employers pursuing scarce talent, governments trying to manage these flows through policy, and individuals seeking their best options given the constraints imposed on them. The central outcome, however, is clear: the flows of high-skilled migrants are very concentrated, both within and across national borders.

Overall rates of international migration have been hovering around 3 percent over the past 60 years. But beneath this perceived stability are certain strong asymmetric patterns, especially with respect to human capital. There were about 28 million high-skilled migrants (those with at least one year of tertiary education) in OECD countries in 2010, reflecting an increase of nearly 130 percent since 1990. This exceptional rise is the result of several forces, including increasing efforts by policy makers to attract human capital as they recognize its importance in economic growth, pull factors generated by skill agglomeration, lower transportation and communication costs, and the rising number of international students.

While OECD countries account for less than a fifth of the world’s population, they host two-thirds of highskilled migrants. Among OECD destinations the distribution is even more skewed. Four English-speaking countries— the United States, the United Kingdom, Canada, and Australia—are the chosen destinations for nearly 70 percent of high-skilled migrants to the OECD. The United States alone hosts close to half of all high-skilled migrants to the OECD. The attractiveness of these destination countries has led others, such as France, Germany, and Spain, to increase their policy efforts. Nevertheless, the volume of skilled migration to these four countries, coupled with the asymmetry in the concentration of leading universities, high-tech firms, and research centers, implies that the global competition for skills will continue to be unequal.

Agglomeration of talent is even starker at the highest levels. The Nobel Prizes in Chemistry, Medicine, Physics, and Economics provide powerful examples.Since World War II more than 65 percent of these Nobel Prizes have been awarded to academics associated with U.S. institutions, only half of whom were born in the United States. Of all these Nobel Prizes, around a third have gone to immigrants, more than half of whom were affiliated with U.S. institutions.

Many host countries end up with higher concentrations of high-skilled immigrants in particular occupations. For example, immigrants account for some 57 percent of scientists in Switzerland, 45 percent in Australia, and 38 percent in the United States. Foreign-born individuals made up 27 percent of all physicians and surgeons and more than 35 percent of current medical residents in the United States in 2010.

Stark inequalities in the concentrations of talent also exist across cities and regions within destination countries. The United States has significant concentrations of high-skilled migrants in Boston, New York City, and Seattle as well as California. These spatial concentrations are even sharper in scientific fields and are also present globally. 

What about origin countries? Many have limited educational capacities and fiscal resources to train workers or to replace those who have emigrated. Countries with particularly high emigration rates of high-skilled workers to OECD destinations in 2010 tended to be small, low-income countries and island states, such as Guyana (93 percent) and Haiti (82 percent). There is a strong inverse relationship between country size and high-skilled emigration rates. These movements of highskilled people away from certain small and low-income countries have raised controversies about “brain drain.”

Agglomeration economies explain the high-skilled migration patterns. The presence of high-skilled people in a location—whether natives or immigrants—increases the incentives for additional high-skilled people to move there because of a wide range of positive externalities. At the core of this process is trade in knowledge services provided by high-skilled people. Skill clusters allow better technology exchanges, deeper labor market specialization, and stronger complementary inputs.

These agglomeration factors and their implications for economic growth make the economics of high-skilled migration quite different from those of low-skilled migration. Moreover, the critical role of actors like firms and universities remains substantially unexplored relative to their importance. The data necessary to analyze these important patterns are just coming online, and the future research potential is immense.

*This blog is featured as a part of a series of posts higlighting articles from the 2017 Spring issue of the World Bank Research Digest available at:  http://econ.worldbank.org/research_digest .

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