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Does Brain Drain Lead to Institutional Gain?
Author(s) -
Li Xiaoyang,
McHale John,
Zhou Xuan
Publication year - 2017
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12407
Subject(s) - emigration , human capital , endowment , brain drain , economics , argument (complex analysis) , estimation , politics , instrumental variable , quality (philosophy) , capital (architecture) , labour economics , demographic economics , economic growth , political science , geography , econometrics , biochemistry , chemistry , philosophy , management , archaeology , epistemology , law
A country's endowment of human capital affects its institutions through various channels. This raises the possibility that skilled emigration can leave its mark on a country's institutional development. We explore the impact of emigrant human capital on home country's institutional quality. Using geographical and genetic distance‐based instrumental variables for emigration and a dynamic panel estimation method, we find that human capital emigration helps the home country's political institutions, but hurts economic institutions. The conventional ‘brain drain’ argument, therefore, needs to incorporate the institutional changes due to skilled labour emigration.