Brain drain and development traps

Abstract

This paper links the two fields of “development traps” and “brain drain”. We construct a model which integrates endogenous international migration into a simple growth model. As a result the dynamics of the economy can feature some underdevelopment traps: an economy starting with a low level of human capital can be caught in a vicious circle where low level of human capital leads to low wages, and low wages leads to emigration of valuable human capital. We also show that our model displays a rich array of different dynamic regimes, including the above traps, but other regimes as well, and we link explicitly the nature of the regimes to technology and policy parameters.