The Effects of Skilled Emigration on Economic Growth - An Empirical Analysis

Abstract: This paper analyses the impact of skilled migration on economic growth in the origin country – a phenomenon often referred to as brain drain. Specifically, this paper aims to contribute to the scant empirical literature of the direct effect on GDP per capita growth following emigration of skilled. To study this dependence, a in depth literature review of the assumed channel that are interrelated with emigration of skilled individuals and its effect on growth. Following that an empirical model is constructed incorporating these channels. The model is estimated with 2SLS, and the results imply that human capital formation is affected negatively following high skilled migration. Other implications are that remittances and high skilled emigration rate interact in some extent and the relative size of the diaspora could potentially have positive effect on growth.