Optimal education policy and human capital accumulation in a context of brain drain.Authors: DJAJIC Slobodan, DOCQUIER Frédéric, MICHAEL Michael S.
Online First: 07/11/2019
This paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students? efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we ?nd that brain drain has confl?icting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the fi?ndings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework.
Reference: DJAJIC Slobodan, DOCQUIER Frédéric, MICHAEL Michael S. Optimal education policy and human capital accumulation in a context of brain drain. Journal of Demographic Economics, 2019, vol. 85, n°4, pp. 271-303.Keywords: