International Migration Policies & Integration (PSCI 4340) - Fall 2024 PDF

PROFESSOR SHIN | PSCI 4340 INTERNATIONAL MIGRATION POLICIES & INTEGRATION Week 10: Brain Drain  ANNOUNCEMENTS - Read Beine et al. (2001) by Wednesday - Week 10 assignment due on Sunday (DV and IV: what are they and what is their relationship and how do you measure the...

PROFESSOR SHIN | PSCI 4340 INTERNATIONAL MIGRATION POLICIES & INTEGRATION Week 10: Brain Drain  ANNOUNCEMENTS - Read Beine et al. (2001) by Wednesday - Week 10 assignment due on Sunday (DV and IV: what are they and what is their relationship and how do you measure them?)  THIS WEEK’S AGENDA - How does the emigration of high-skilled workers a ect the states from which they come? Does high-skill immigration have a positive or negative consequence for sending states? - Brain Drain: Curse or Boon? - Brain drain and economic growth - Creating Variables in R - Changing non-numerical variables to numerical variables and vice versa ff IMPACT OF SENDING COUNTRIES’ MIGRATION POLICIES ON MIGRANTS’ RIGHTS DO SENDING GOVERNMENTS CARE ABOUT MIGRANTS’ RIGHTS? - Yes, in theory…. - But due to economic incentives, sending countries may not always insist on more or equal rights :( - Insistence on rights may jeopardize chances of migrants’ going abroad - May sacri ce rights at home (short term loss of rights may mean long term improvement in the future) - Countries vary in their ght for their migrant workers’ rights - Protectionist: Philippines, Latvia - Liberalist: Latin American countries fi fi PROTECTING EMIGRANTS’ RIGHTS - Some countries have been active in protecting their emigrant laborers’ rights when working abroad - Philippines: export ban of migrant workers to countries not compliant with the Migrant Workers and Overseas Filipinos Act - Latvia: government directly engages with the Swedish government to defend the Latvian company and its workers working in Sweden  THE TRADE OFF? - Too much protection may be a bad thing for the sending countries, especially for low-skilled workers - Low-skilled workers are abundant around the world - Receiving countries are, therefore, in the position of rejecting low-skilled workers from these countries - Sending countries risk losing economic opportunities - Trade o easier for: democratic vs. non- democratic countries ff  PRIORITIZING ECONOMIC BENEFITS OVER RIGHTS - Some countries have prioritized access of migrants over rights they have while working abroad - Pakistan: National Emigration Policy focuses on access and remittances rather than rights - Mexico: “Policy of nonintervention” for emigrants to the US and monitoring workers in Canada - Some countries have hierarchical relationships with receiving countries  THE TRADE OFF? - A potential trade o for sending governments not standing up for the emigrant workers’ right is … - Losing legitimacy among their citizens - Bad reputation in the international community - More people leaving the country ff BRAIN DRAIN: CURSE OR BOON?  BRAIN DRAIN - What is a brain drain? - Is brain drain a good thing or a bad thing? - From the perspective of receiving countries - From the perspective of natives - From the perspective of migrants - From the perspective of sending countries?  BRAIN DRAIN - Brain drain refers to the international transfer of human capital resources - Migration of highly educated individuals from developing to developed countries - Migration of engineers, physicians, scientists, and other very high skilled professionals with university training, often between developed countries ISSUE FOR DEVELOPMENT - Brain drain has long been viewed as a serious constrain on the development of poor countries - Comparative data reveal that by 2010, there were 28 million high-skilled immigrants living in member countries of OCED — a 130% increase since 1990 - Growth rate for low-skilled migrants in OCED countries from 1990 to 2010 was only 40 percent - 2/3 came from developing and transition countries  WHAT DRIVES THE BRAIN DRAIN? - People motivated to ee their country - Poverty and lack of economic growth - Discrimination, repression, and a lack of freedom - Easier for educated to emigrate - Financial resources - Information from networks fl MEASURING BRAIN DRAIN - Brain drain has two components - The average emigration rate (the mean of all skill groups) - Index of positive selection in emigration (the proportion of college graduates in the total number emigrating divided by the proportion of graduates among natives) - Brain drain: proportion of total educated labor force - Egypt: the emigration of 150,000 skilled Egyptians (4.5% of their educated labor force) - Seychellians: emigration of 2,500 skilled Seychellians (56% of their educated labor force) - Brain drain in Egypt is lower than Seychellians despite absolute number of emigrants IMPACT OF BRAIN DRAIN ON SENDING COUNTRIES CLASSIC MODEL OF BRAIN DRAIN - Brain drain has a negative impact on the sending countries’ economy - Loss of socio-economic potential - Loss of tax revenues - Shortages of manpower in key sectors: education and health - Technological gap between sending and receiving countries DYNAMIC MODEL OF BRAIN DRAIN - Brain drain can also have a positive impact on the sending country - This happens when the brain gain is greater the brain drain - Brain gain happens when - Brain drain raises expected return on education - This induces additional investment in education - Results in a bene cial brain drain or net brain gain - Net brain gain raises welfare and growth fi DYNAMIC MODEL OF BRAIN DRAIN - Remittances also make economic contributions to the sending country - Other bene ts include - Skilled returnees creating jobs - Enhanced intergenerational transmission of skills - Spillovers between skilled workers (friends, networks back at home) fi WHICH MODEL ARE YOU MORE CONVINCED BY? DO THEY REFLECT REALITY? ARGUMENTS AGAINST THE BRAIN GAIN THEORY - Scholars nd that the impact of the brain drain on welfare and growth is - likely to be signi cantly smaller - likelihood of a negative impact on welfare and growth signi cantly greater than reported in the literature on brain gain - Arguments for a smaller brain gain, resulting in a smaller net brain gain (brain drain > brain gain) and implying a smaller or negative impact on welfare and growth include the following: - High-ability individuals will emigrate - Unskilled individuals migrate as well - Education bene t is subject to a high degree of uncertainty - Resources spent on education generates externalities fi fi fi fi EMIGRATION OF HIGH-ABILITY INDIVIDUALS - The brain gain hypothesis is inaccurate because high-ability individuals are always going to emigrate - In developing countries, skilled individuals are always better o emigrating to a developed country where prospects for a quality life is better - Those who remain are those that were not selected by the host country or did not have enough skills to nd jobs abroad - Therefore, the impact of these individuals on the sending country will not be as high as those that emigrated (if they chose not to migrate) fi ff BENEFITS OF UNSKILLED MIGRATION - In the brain gain literature, there is the assumption that the brain drain raises expected return on education - If I get an education, I have a higher chance of emigrating and getting a good job and life! - This is not always the case - Outmigration of unskilled workers is substantial in most source countries - Their expected wage is higher under migration - Therefore, the expected return on education is not as great as assumed EDUCATION BENEFIT SUBJECT TO HIGH UNCERTAINTY - While the brain gain literature assumes education will always bene t the emigrant in the host country, their bene t is actually subject to a high degree of uncertainty - Brain waste: not everyone employeed for the right job (some are overquali ed) - The demand/policy of host country matters: some countries do not hire skilled workers - Creates a negative brain gain - High demand of Filipino nurses around the wrold - Some medical doctors have gone back to school to become nurses - Some students have changed their study plan from medicine to nursing fi fi fi EDUCATION BENEFIT SUBJECT TO HIGH UNCERTAINTY - Risk aversion is likely to greatly reduce the brain-drain-induced brain gain - Education is associated with risks that some are unwilling or forced to avoid - Exchange rates - Skilled wages at home - Host countries’ immigration policies - Probability of obtaining a job abroad - Allowed length of stay in host country - Value of the student’s time for the family during the study EXTERNALITIES CREATED BY EDUCATION - Assuming that education by the sending country is provided publicly, an increase in education will require additional funds - Time spent acquiring additional education means - Less work - Lower tax revenues - Result in - Government raising taxes to fund education > reduce demand for education and result in a smaller brain gain - Government may reduce other public expenditures to fund education > negative contribution to welfare of sending country > less demand for education > smaller brain gain - Families have to forgo the chances of the student not contributing to the household income > decrease in health and food expenditure > fall in quality of life > less demand for education > smaller brain gain BRAIN DRAIN AND ECONOMIC GROWTH  BRAIN DRAIN AND ECONOMIC GROWTH - Beine and co-authors (2001) also question the brain gain theory - They argue that bene cial brain drain (BBD) happens when - Ex ante “brain e ect” > ex post “drain e ect” - When investments in education (skilled natives remaining in sending country) > emigration levels ff ff fi THE MODEL OF BBD - Beine and co-authors focus on - Small open economies - Overlapping generation of two period-lived individuals - Period 1: spend time getting an education - Period 2: supply a xed quantity of labor and productivity depends on investment in education in period 1 - Every individual is di erent in their ability to learn (not all skilled individuals the same) - Economic development is due to intergenerational transmission of human capital - Passing down skills/knowledge by educated natives to younger generation - Emphasizes how investment in education now has a long-term e ect on development fi ff ff THE MODEL OF BBD - In an economy open to migration, individuals compare - Foreign vs. domestic returns to human capital when taking their education decisions - Assume that human capital acquired through education is: transferable and rewarded higher return abroad - In period 2, individuals have to decide whether to stay home or migrate. This decision is determined by - Internal factors: emigration policies set by source countries, change in personal environments - External factors: immigration policies set by host countries (quotas, temporary visas, etc.) - Since host countries give out visas based on observables (i.e., education) and not only unobservables (i.e., individual’s productivity) - Assume migrants are randomly selected among the educated through relative quotas set by immigration authorities - So depending on the possibility of migration, people would decide whether to invest in education or not THE CASE FOR A BBD - There are two opposite growth e ects of the brain drain - Drain e ect: educated emigrants leaving the country - Brain e ect: educated natives who stay at home - BBD = brain e ect > drain e ect - First, let’s discuss the extreme cases of the brain drain - Probability of migration = low - Developing country may or may not bene t from a small opening of its frontiers to the migration of educated people - Probability of migrant = very high - Developing country cannot bene t because all educated people are leaving the country ff ff ff ff ff fi fi  THE CASE FOR BBD - Between these two extreme cases, the total e ect (brain drain vs. brain e ect) varies by scenarios A. Case 1: brain drain is always detrimental - Chances of migrating is high and all educated individuals leave (drain e ect), low motivation by government to invest in education - Result: low growth rate (underdevelopment trap) B. Case 2: brain drain is bene cial with intermediate levels of migration - Chances of migrating is moderate, motivates many to be educated (brain e ect), and only some leave (drain e ect) - Result: moderate growth rate C. Case 3: brain drain is bene cial with low levels of migration - Chances of migrating is low, but the opening still motivates many to get educated (brain e ect), only a few leave (drain e ect) - Result: high growth rate ff ff fi fi ff ff ff ff ff EMPIRICAL EVIDENCE - Beine and co-authors want to test several relationships derived from their hypothesis on the brain drain 1. Positive relationship between migration opportunities and proportion of young individuals who decide to invest in education 2. Positive relationship between growth rate and share of educated people - To test these relationships, they contemplate on what type of data to use - Number of emigrants as reported by the sending country? - Number of immigrants as reported by the hosting country? - What are some strengths and weaknesses of these measures? DATA ISSUE - Emigration data - Numbers of people leaving the sending country - Mainly based on records reported by authorities of the source countries - Emigration data is less reliable since emigration declarations are not compulsory - Includes all the people leaving the country, including tourists - Immigration data - Number of people entering the host country - Has well-de ned categories (visa type) - Can know whether skilled or unskilled worker (easier to measure brain drain) fi  RESULTS - Compare across 37 developing countries - Find some support for their hypotheses: - Migration and wage di erential positively and signi cantly correlated - Also nd that levels of migration increases investment in education (brain e ect) - Find weak results for investment in education and growth - Lastly, they nd a positive relationship between migration and economic growth (but not signi cant) - Although these results do not con rm the BBD theory, it does provide the potential that this phenomenon may somewhat be true fi fi fi ff fi fi ff CREATING VARIABLES IN R  TODAY’S AGENDA - Create qualitative and quantitative variables in R - Change qualitative > quantitative variable - Change quantitative > qualitative variable QUANTITATIVE VS. QUALITATIVE VARIABLES - Variables are largely categorized into quantitative and qualitative variables - Quantitative variable: can be measured and given a numerical value - Numerical variable - Age, Income, Population - Qualitative variable: variable that is not numerical (limited values or categories) - Categorical variable - Gender, Countries, Opinions CREATING VARIABLES IN R 1. Qualitative variable: age of 100 people in Conway # Set the parameters (limit) n