A Brain Gain or a Brain Drain: Migration, Endogenous Fertility and Human Capital Formation

This study develops an endogenous growth model of migration to analyze the impact of international migration on the economic growth of a source country. When making their fertility and education decisions, adults may have the option of migrating to a foreign country. We find that changes in the migration probability or the extent of migration costs will lead to a trade-off between the quality and the quantity of children. When a host country cannot differentiate between the abilities of migrants, an increase in migration probability will raise a source country's economic growth. When low- and high-skilled workers are faced with different migration probabilities, allowing more low-skilled workers to emigrate will cause a "brain gain" in both the short run and the long run. However, relaxation of restrictions on the emigration of high-skilled workers will damage economic growth in the long run, although a brain gain may occur in the short run. © 2008 Western Economic Association International.