The Brain Drain: A Review of Theory and Facts

Skilled migration has increased in recent years, often stimulated by the explicit use of targeted visa programmes by developed countries. This paper examines the available analytical and empirical literature on the brain drain to try and understand better whether skille migration from developing countries must always be harmful to the country of origin. We show that early generation models ¿ mostly dating to the 1970s ¿ found that such migration would be harmful, mostly though the impact on wages and employment, as well as through fiscal costs. A more recent literature has argued that a beneficial brain drain can arise if migration has educational externatilities. As human capital rises, growth will also be positively affected. However, we show that if screening is applied such benefits may disappear or become smaller. Recent empirical work on the health and software sectors provides some contrasting evidence