A Theory of Brain Drain and Public Funding for Higher Education in the United States

Support for higher education has been decreasing in the United States. From 1980 to 2005, real state appropriations for higher education per student have decreased an average of 20 percent, with only 6 states increasing funding. One reason cited for decreased university funding has been the mobility of college graduates (Ronald A. Wirtz 2003). In fact, the college educated often leave the state that subsidized their education. Yolanda K. Kodrzycki (2001) found that 37 percent of people with a bachelor’s degree changed their state of residence between 1979 and 1996, compared to 19 percent of those with a high school education or less. Although state policymakers are concerned about outmigration, empirical studies present contrasting evidence regarding the relationship between outmigration and university funding (James G. Strathman 1994; Polgreen 2008). Thus, a structured model is needed to clarify this relationship. To our knowledge, we are the first to develop such a theory. Building upon a theory of international brain drain developed by Kaz Miyagiwa (1991), we develop a model that includes heterogeneity in ability among college graduates and emphasizes the role of economies of scale in the returns to higher education. We depart from Miyagiwa’s paper in several important ways. (1) We study domestic brain drain within the United States, but brain drain across state boundaries differs from international brain drain: we define brain drain as the net emigration of college graduates (skilled personnel) from the state where they got their college degree to another state. (2) We account for different degrees of returns to scale A Theory of Brain Drain and Public Funding for Higher Education in the United States