The microeconomic determinants of emigration and return migration of the best and brightest: Evidence from the Pacific

Abstract

A unique survey which tracks worldwide the best and brightest academic performers from three Pacific countries is used to assess the extent of emigration and return migration among the very highly skilled, and to analyze, at the microeconomic level, the determinants of these migration choices. Although we estimate that the income gains from migration are very large, not everyone migrates and many return. Within this group of highly skilled individuals the emigration decision is found to be most strongly associated with preference variables such as risk aversion, patience, and choice of subjects in secondary school, and not strongly linked to either liquidity constraints or to the gain in income to be had from migrating. Likewise, the decision to return is strongly linked to family and lifestyle reasons, rather than to the income opportunities in different countries. Overall the data show a relatively limited role for income maximization in distinguishing migration propensities among the very highly skilled, and a need to pay more attention to other components of the utility maximization decision. Keywords: AbstractA unique survey which tracks worldwide the best and brightest academic performers from three Pacific countries is used to assess the extent of emigration and return migration among the very highly skilled, and to analyze, at the microeconomic level, the determinants of these migration choices. Although we estimate that the income gains from migration are very large, not everyone migrates and many return. Within this group of highly skilled individuals the emigration decision is found to be most strongly associated with preference variables such as risk aversion, patience, and choice of subjects in secondary school, and not strongly linked to either liquidity constraints or to the gain in income to be had from migrating. Likewise, the decision to return is strongly linked to family and lifestyle reasons, rather than to the income opportunities in different countries. Overall the data show a relatively limited role for income maximization in distinguishing migration propensities among the very highly skilled, and a need to pay more attention to other components of the utility maximization decision..

Risk attitudes and migration

“…We also do not find any effect from height and weight, against existing evidence that these features matter for labor market outcomes, as they are often considered as signals of good health and productivity (Case and Paxons, 2008). The different results emerged from our analysis perhaps reflect that the decision to migrate that we captured using the RHS includes individuals who do so only temporarily on a seasonal or ad hoc basis, and possibly to not too distant places, while most other studies focus on permanent or long-term migration (Jaeger et al, 2010;Gibson and McKenzie, 2009). …”

“…Notwithstanding the literature viewing migration as a risky decision, empirical evidence of the relationship between the migration decision and migrating individual's risk tolerance isscarce, especially in the case of economies in transition (Heitmuller, 2005;Conroy, 2009: Gibson andMcKenzie, 2009;Hao et al, 2014). Jaeger et al (2010) find that risk tolerance and migration in Germany are positively related.…”

“…Evidence from countries undergoing rapid economic and social transformations is minimal (Gibson and McKenzie, 2009;Hao et al, 2014;Dohmen et al, 2015). Yet it is precisely from economies in transitions that new insights on the link between risk and migration can emerge, as in such places people experience at once a wider set of choices about where to work and live and profound changes in the risk environment in which they take decisions.…”

How to attract foreign students

“…To investigate the decision more comprehensively, researchers have compiled an impressive data set that tracks top high-school students from five countries with a high rate of migration for high-skilled students (Ghana, Micronesia, New Zealand, Papua New Guinea, and Tonga) [7], [8]. The research confirms the assumption of the basic model and the empirical evidence based on macrolevel data: The decisions to pursue education and to work abroad are linked.…”

A Panel Data Analysis of the Brain Gain

“…Batista, Lacuesta, and Vicente (2008) estimate that migration prospects are responsible for the bulk of human capital formation in Cape Verde. Gibson and McKenzie (2009) show that Tonga's "best and brightest" students contemplated emigration while still in high school, which led them to take additional classes and make changes in their choice of courses. Chand and Clemens (2008) compare education choices of ethnic Fijians and Fijians of Indian ancestry in the aftermath of the 1987 military coup and interpret differences as quasi-experimental evidence on the incentive mechanism.…”