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Human Capital Formation, International Labor Mobility and the Optimal Design of Educational Grants

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  • Bernard Franck

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Robert F. Owen

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

Abstract

A two-country, two-period model of international migration with heterogeneous agents highlights microeconomic foundations for examining the interrelation between brain drain, brain gain and whether human capital formation is undertaken at home or abroad. Ex ante choices regarding where to study depend on abilities, relative qualities of university systems, sunk educational investments, government grants, and endogenously determined, individual foreign employment probabilities. Self-selection critically defines an inherently wide-range of conceivably positive or negative net welfare effects. The optimal design of alternative educational grant schemes, aimed at enhancing the source country's welfare, also depends on the heterogeneity of abilities and associated informational assumptions.

Suggested Citation

  • Bernard Franck & Robert F. Owen, 2015. "Human Capital Formation, International Labor Mobility and the Optimal Design of Educational Grants," Working Papers hal-01158239, HAL.
    • Handle: RePEc:hal:wpaper:hal-01158239
    Note: View the original document on HAL open archive server: https://hal.science/hal-01158239
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    References listed on IDEAS

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    1. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
    2. Tim Krieger & Thomas Lange, 2010. "Education policy and tax competition with imperfect student and labor mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(6), pages 587-606, December.
    3. Thomas Lange, 2013. "Return migration of foreign students and non-resident tuition fees," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 703-718, April.
    4. Gabrielle Demange & Robert Fenge & Silke Uebelmesser, 2020. "Competition in the quality of higher education: the impact of student mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1224-1263, October.
    5. Stark, Oded, 2004. "Rethinking the Brain Drain," World Development, Elsevier, vol. 32(1), pages 15-22, January.
    6. Stark, Oded & Helmenstein, Christian & Prskawetz, Alexia, 1998. "Human capital depletion, human capital formation, and migration: a blessing or a "curse"?," Economics Letters, Elsevier, vol. 60(3), pages 363-367, September.
    7. Barry Chiswick, 1999. "Are Immigrants Favorably Self-Selected?," American Economic Review, American Economic Association, vol. 89(2), pages 181-185, May.
    8. Maurice Schiff & Ça?lar Özden, 2006. "International Migration, Remittances, and the Brain Drain," World Bank Publications - Books, The World Bank Group, number 6929.
    9. Michel Beine & Fréderic Docquier & Hillel Rapoport, 2008. "Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers," Economic Journal, Royal Economic Society, vol. 118(528), pages 631-652, April.
    10. Donald Lien & Yan Wang, 2005. "Brain drain or brain gain: A revisit," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(1), pages 153-163, July.
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    Cited by:

    1. Robert F. OWEN, 2017. "Migration, Human Capital, Brain Drain and Gain -A Perspective in Light of the EU’s Experience-," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 196, pages 200-236, December.
    2. Gega Todua, 2017. "Financing Education Abroad: A Developing Country Perspective," CERGE-EI Working Papers wp608, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

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    Keywords

    human capital formation; brain gain; brain drain; international migration; sunk costs; educational grants; self-selection; asymmetric information;
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