Original Article
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Does Brain Drain Lead to Institutional Gain?
This paper was previously circulated under the title ‘Emigrants and Institutions’. We would like to thank seminar participants at Queen's University, the University of British Columbia, the University of Michigan, the Midwest Economic Association Meetings, 2009 World Bank Conference on Migration and Development, and the United Nations International Symposium on International Migration and Development in Turin for their helpful comments and suggestions. All errors are our own. Please direct all correspondence to the corresponding author, Xuan Zhou.
Abstract
A country's endowment of human capital affects its institutions through various channels. This raises the possibility that skilled emigration can leave its mark on a country's institutional development. We explore the impact of emigrant human capital on home country's institutional quality. Using geographical and genetic distance-based instrumental variables for emigration and a dynamic panel estimation method, we find that human capital emigration helps the home country's political institutions, but hurts economic institutions. The conventional ‘brain drain’ argument, therefore, needs to incorporate the institutional changes due to skilled labour emigration.
