Emigration, Composition Of Human Capital And Economic Growth

With the development of economic globalization, the emigration of skilled workers in developing countries has increased dramatically since 1960s. As a potential benefit from the international migration in source countries, the schooling incentives have been emphasized by growing literature in recent years, but almost all previous literature neglect the changes of human capital composition. By distinguishing the types of human capital and employing the relationship between the composition of human capital and the economic growth, this paper builds three theoretical models and analyzes how the possibility of migration affects the human capital accumulation and the economic growth in source countries.The first model analyzes how the possibility of migration affects the composition of imitation knowledge to innovation knowledge under the condition that the labor market is efficient. In this model, the productivity is the only source of economic growth and is driven by imitation activities and innovation activities. The knowledge is divided into imitation knowledge and innovation knowledge, the imitation knowledge is more suitable for the imitation activities, the innovation knowledge is more suitable for the innovation activities, the possibility of emigration might influence the economic growth by affecting the workers'behavior of knowledge accumulation. The results show that for those less developed source countries, workers are supposed to accumulate more imitation knowledge, so the economy can rapidly shorten the technology distance to frontier by imitation activities. For those advanced destination counties, the technology distance to frontier became smaller or even disappeared, workers are supposed to accumulate more innovation knowledge, so the productivity can be improved by innovation activities. Because of the difference of productivity between the source countries and the destination countries, the possibility of migration will motivate the workers in source countries to accumulate more innovation knowledge, this will distort the composition of knowledge and slow down the economic growth. In addition, the migration policies of skill biased will make the distortion of human capital composition more serious, and slow down the economic growth further. By introducing the cost of education, the extension of model also analyze the "level effect" of migration on human capital emphasized in previous literature. The results show that the possibility of migration will be hurtful to the economic growth in source countries by distorting the composition of human capital, meanwhile, it can also foster the economic growth in long run by reinforcing the incentives to improve the investment on human capital.The second model analyzes how the possibility of migration affects the composition of generalists to specialists under the condition that the labor market is efficient. In this model, innovation activity is the driver of economic growth, and is divided into two types of innovation mode:independent innovation and collaborative innovation. The workers who prefer to the independent innovation choose the generalist education, while the workers who prefer to the collaborative innovation choose the specialist education. The possibility of migration can influence the economic growth by affecting the composition of human capital. The results show that due to the lower stock of knowledge and the higher coordination cost, in the less developed source countries, the skilled workers are more inclined to choose the generalist education and undertake the innovation on their own. By contrast, in the advanced destination countries, the skilled workers are more inclined to choose the specialist education and undertake the innovation by specialization. Because of the difference of coordination cost and the skill biased policies of migration, the possibility of migration will motivate more workers of source countries to choose the specialist education, this will distort the composition of human capital and be hurtful to the efficiency of innovation and the economic growth. Moreover, the model discusses the "level effect" of migration on human capital. The results show that the possibility of migration can reinforce the incentives to improve investment on education and increase the proportion of skilled workers, which will facilitate the economic growth by international spillover. For those least-developed countries, the "level effect" of migration on human capital might help the economy to jump out the trap of development by motivating the innovation activities to occur. The third model analyzes how the possibility of migration affects the type of economic equilibrium under the background that the labor market fails. In this model, the specialization is the driver of economic growth, there are two types of equilibrium: specialist equilibrium and generalist equilibrium, the possibility of migration influence the economic growth by affecting the type of equilibrium. The results show that due to the lower stock of specialist, the workers in less developed countries are more inclined to choose the generalist education, so the economy is usually trapped into the generalist equilibrium and fails to benefit from specialization. If the possibility of migration motivates workers to choose the generalist education, the per capita income will fall in short run. The "level effect" of migration can finally make the per capita income rise in long run, but the economy is still a generalist equilibrium, so it can not benefit much from the schooling incentives. If the possibility of migration motivate workers to choose the specialist education, the per capita income will also fall in short run, moreover because migration changes the composition of human capital, the economy even become worse in mid-term:the per capita income falls further; the unemployment of skilled workers occurs; workers are over-educated. However, as the stock of specialist increases, the economy will gradually move toward the specialist equilibrium and finally catch up with the developed countries. In addition, this paper analyzes how the return migration affects the source countries. The results show that either the specialists or the generalists, migrants return are both beneficial for the source countries, but the effects are very different. The return specialists not only increase the stock of human capital and the per capita income, but also promote the degree of specialization by generating the externality human capital and providing the organization of specialization, this will make the source countries jump out the "knowledge trap".Because of the uneven growth of world population and the uneven distribution of income, the international migration of skilled workers will remains a high level in the future. Meanwhile, driven by the information and communication technology, the composition of human capital becomes more and more important to the economic growth, and some developed countries are constituting more specific policies on migration. From perspective of developing countries, in order to share the benefits of globalization, they should consider the "level effect" and "composition effect" together, and properly regulate the accumulation of human capital using education policies, migration policies and other measures.