Last week, the journal Science published a new review piece on high-skilled emigration and origin countries that I co-wrote with Catia Batista, Daniel Han, Johannes Haushofer, Gaurav Khanna, Mushfiq Mobarak, Caroline Theoharides and Dean Yang (ungated version). A lot of the debates around brain drain and brain gain have relied on anecdotes, theoretical arguments, and non-causal associations. This review is an effort to put together the accumulating body of causal evidence and share it in an accessible way that can communicate beyond economists to scientists, policymakers, and others interested in debates about high-skilled emigration.
How high-skilled emigration offers benefits as well as costs for sending countries
Popular debate often observes people leaving and assumes that this must result in a loss for the sending country: public health officials worry about a loss of doctors and nurses, political scientists about the loss of those who could push for regime changes at home, and economists about the fiscal and productive externalities of high-skilled individuals. The paper provides a conceptual framework (shown in the figure below) to illustrate the main channels through which migration opportunities and emigration can affect the human capital stock, economy, and welfare of the sending country – and through which simply observing out-migration does not necessarily mean human capital or welfare have fallen. It shows that we now have causal evidence for many of these channels – they are not just theoretically possible, but empirically relevant.
For example, two of the co-authors of this review have worked on papers that show how migration opportunities opening abroad led to an increase, not a decrease, of human capital at home. Figure 2 below illustrates this from Theoharides’ work in the Philippines: when the U.S. expanded the number of visas available to foreign nurses between 2000 and 2006, over 26,000 additional nurses emigrated to the U.S. But this new opportunity encouraged many more people to train as nurses (an additional 113,775 new licenses nurses over this period) – resulting in a net increase in nurses in the Philippines of over 86,000. Khanna likewise shows that India gained more IT professionals when the H-1B cap was relaxed to allow more Indian IT workers to migrate.
Figure 2: More nurses from the Philippines emigrating to the U.S. increased the number of nurses in the Philippines
The review walks through the evidence on other channels like return migration (including after studying abroad), knowledge transfers and innovation, and remittances also contributing to development outcomes at home.
Nuances and What we don’t know
The recent causal evidence shows that high-skilled emigration can have positive outcomes for countries of origin. But this does not mean that it always will, and there are many nuances as well as areas where more work is needed. I thought I’d note a few of these here that may of interest to our readers:
· Not all high-skilled emigration is the same: much of the early work on high-skilled emigration tried to quantify it using national censuses that allowed classifying workers into whether they have tertiary education or not. But the rates of emigration, and the mechanisms through which it can affect home countries can vary a lot by type of skill. In Figure 1 in the paper we provide a range of different estimates of high-skilled emigration rates by both education level (highest academic achievers, bachelors or above, and Ph.D.) and occupation (inventors and scientists, engineers and IT professionals, medical professionals). This then makes clear that asking “what is the effect of high-skilled emigration on business development in the country of origin?” is not a very well-formed question without thinking about who these high-skilled emigrants are. Migration of academics, scientists and medical professionals are likely to have much smaller impacts on this than the migration of entrepreneurs and inventors – whereas impacts on knowledge transfers or health may be greater from some of these other groups leaving. Even if we look at Ph.D.’s emigrating, the effect may differ for an engineer, physicist, economist, and art historian. So this is one challenge for research going forward: be much clearer about what “high-skilled” means. Similarly, not all human capital at home is the same: if opportunities abroad result in more people training as nurses and doctors at home, it is unclear whether this is a “good” thing – perhaps they are being diverted from other skilled sectors at home where they could be even more valuable.
· The time frame and policy context matter for looking at effects: We see a very rapid response in the Philippines and India to nurses and IT professionals leaving, where private training facilities were able to quickly increase the number of training slots in response to increased demand. In contrast, in countries where medical schools are constrained to only train a certain quota of doctors each year, and cannot increase this even when people leave, this brain gain effect is much less likely to occur. Often it does take time for economies to adjust, and so rapid outflows may cause a short-term loss, even if the effects are much less severe or positive over a longer term. For example, when the European Union expanded to allow outmigration from Eastern Europe, industries in Eastern Europe suffered a short-term increase in labor costs and reduction in productivity as their skilled workers left – but these negative effects fell over time as firms adjusted. Researchers need to therefore carefully consider the time frame at which they look at impacts, and impacts of large sudden changes (which are the easiest to statistically identify) may differ from what we should expect in normal times with a more predictable migration outflow that policy and firms can respond to.
· One research gap is the type of country studied: much of the literature has examined impacts on large, middle-income countries like India, Mexico, the Philippines – where skilled emigration is driven by more lucrative opportunities for skilled workers abroad (that is largely by pull factors), rather than in very poor and fragile countries in which people are fleeing (driven by push factors) and in which those left behind have limited opportunities for investing more in skills, and where domestic conditions discourage investment. We need more work on small and fragile countries where impacts may be different.
· The biggest gap is research on the appropriate policy responses: Most of the causal evidence here comes from using difference-in-difference or shift-share IVs, in which there is some exogeneous variation in the likelihood of high-skilled emigration. Research then documents the responses to the shocks. There is much less research about what the effectiveness is of different policy actions to change these impacts. For example, innovative ways to fund education through skill-partnerships, best practices for diaspora engagement, ways to recognize skills acquired abroad, etc. We need a lot more active policy efforts with research attached to test which policies work to enhance the benefits and reduce the costs of high-skilled emigration.
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