The brain drain : an unmitigated blessing ?

ing from the brain drain, the welfare impact of emigration is likely to be small and more than offset by the flow of remittances. However, the calculations in the previous section assume labour to be homogeneous. Still, the most often voiced concern is that migration deprives sending countries of their most skilled and most entrepreneurial workers. Skilled workers may generate strong positive externalities in production (Barro and Salai-Martin, 1995; Lucas, 1990) and lead to faster growth. Moreover, the costs of education are typically borne by the home country, with its attendant benefits being lost to the country if the worker emigrates (Bhagwati, 1976). In terms of fig. 1, the marginal productivity schedule would shift inward as a result of the emigration of skilled workers and the dissipation of the related externalities. The size of such an effect would wipe out the second order magnitude of the traditional Harberger triangle described in the previous section. While therefore the “old” development literature tended to see the brain drain as a significant hindrance to the economic prospects of developing countries, more recently these concerns have been greatly amplified by the emphasis in the new growth theory on human capital as a key engine of growth. In an interesting extension of the endogenous growth approach, Miyagiwa (1991) shows that the emigration of skilled workers will hurt mostly other skilled workers – those who do not migrate – that used to benefit relatively more from the scale externality associated with a large pre brain drain stock of skills. Contrary to conventional presumptions, unskilled workers would be relatively less affected. 3 This relationship however is likely to depend also on the skill composition of migration, the attachment of migrants to their home country, the wage differentials between the host and the source country and other complicating factors. A more accurate analysis of remittances behavior is presented below.