Extending the case for a beneficial brain drain

The recent literature about the so-called beneficial brain drain assumes that destination countries are characterized not only by higher wages than the source country, but also by a higher or at least not lower relative return to education. However, it is a well known stylized fact that the returns to education are higher in rich than in poor countries. Against this background, we assess whether the main prediction of this literature, namely the possibility of a beneficial brain gain, still holds under the reverse assumption. We show that there is a still a strong case for a beneficial brain drain, even if the returns to education in the source country exceed those in the destination country. Immigration policies that are biased against unskilled workers are not necessary for a beneficial brain drain to occur once one considers that agents face heterogeneous migration costs.