Does Brain Drain Lead to Institutional Gain?

Abstract

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.

Migration and institutional quality across Italian provinces: The role of human capital

“…The effect of the total net migration rate ( net_tot ) on the level of institutional quality is not statistically significant. When the skill level is added into the analysis and the total migration rate is replaced with a measure of the human capital net gain ( net_hk ), the related coefficient is statistically significant and positive (column (2)), which is consistent with the findings in other studies focused on the relationship between education and institutions (Bobba & Coviello, ; Castelló‐Climent, ; Li et al, ). In particular, the province that attracts human capital improves the overall quality of government by stimulating a process of skills accumulation.…”

“…A higher skill intensity embodied in the migration flows, indeed, contributes to the modification of the human capital accumulation in the sending and receiving places. Consequently, the ability of migration to affect the level of institutions could be reinforced by the educational structure of migrants (Beine & Sekkat, ; Docquier, Lodigiani, Rapoport, & Schiff, ; Li, McHale, & Zhou, ).…”

Local Institutional Quality and Return Migration: Evidence from Viet Nam

“…The quality of political, economic, and other institutions is recognized as one of the many determinants of migration decisions (Borjas, ; Rowlands, ; Karemera et al., ; Vogler & Rotte, ; Bertocchi & Strozzi, ; Ashby, ; Hatton & Williamson, ; Cooray & Schneider, ; Ariu et al., ). On the other hand, there is also evidence of potential impacts of international migration on the institutional quality of the home country (Ammassari, ; Spilimbergo, ; Batista & Vicente, ; Pfutze, ; Beine & Sekkat, ; Chauvet & Mercier, ; Docquier et al., ; Li et al., ; Barsbai et al., ).…”

Does emigration reduce corruption?

“…That said, evidence exists that corruption might be 'greasing the wheels' of an economy (e.g., Bologna and Ross 2015;Dreher and Gassebner 2013). 2 More broadly, the paper contributes to a burgeoning literature on 'diaspora externalities'-the effects of emigration on the political, institutional and social outcomes in the migrants' countries of origin (Batista and Vicente 2011;Barsbai et al 2017;Bertoli and Marchetta 2015;Chauvet and Mercier 2014;Docquier et al 2016;Li et al 2017;Pfutze 2012). level by considering a wider range of public officials as potential bribe takers, making a distinction between migration with and without monetary remittances, and considering attitudes toward corruption as well as actual bribery experiences. Second, we focus our study on the Western Balkan countries, a region with a long and complex migration history, the consequences of which are not well understood.…”

“…First, Hirschman's 'exit and voice' approach (Hirschman 1970) has often been used to explain the institutional effects of migration at the country level (see, e.g., Li et al 2017). According to this framework, migration can be viewed as an 'exit' option for people dissatisfied with their current situations at home.…”