A Panel Data Analysis of the Brain Gain

In this paper, we revisit the impact of skilled emigration on human capital accumulation using new panel data covering 147 countries during the period 1975-2000. We derive testable predictions from a stylized theoretical model and test them in dynamic regression models. Our empirical analysis predicts conditional convergence of human capital indicators. Our findings also reveal that skilled migration prospects foster human capital accumulation in low-income countries. In these countries, a net brain gain can be obtained if the skilled emigration rate is not too large (i.e., it does not exceed 20-30% depending on other country characteristics). In contrast, we find no evidence of a significant incentive mechanism in middle-income, and not surprisingly, high-income countries. (C) 2010 Elsevier Ltd. All rights reserved.