Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers

Abstract

Using new data on emigration rates by education level, we examine the impact of brain drain migration on human capital formation in developing countries. We find evidence of a positive effect of skilled migration prospects on gross human capital formation in a cross‐section of 127 countries. For each country of the sample we then estimate the net effect of the brain drain using counterfactual simulations. Countries combining relatively low levels of human capital and low emigration rates are shown to experience a ‘beneficial brain drain’, and conversely, there are more losers than winners, and the former tend to lose relatively more than what the latter gain.