“Human Capital Flight”: Impact of Migration on Income and Growth

An endogenous growth model with heterogeneous agents is analyzed to show that “human capital flight” or “brain drain” can lead to a permanent reduction in income and growth of the country of emigration relative to the country of immigration. Convergence between the two is therefore rendered unlikely with such migration. While, in a closed economy, subsidizing human capital accumulation at all levels of education can benefit economic growth, in an open economy where the educated are more likely to migrate, growth may be better fostered by subsidizing only lower levels of education.