Education, Unemployment and Migration (Revised Version, 2009)
27 Pages Posted: 19 Sep 2009
Date Written: August 20, 2009
Abstract
This paper studies a two-region model in which unemployment, education decisions and interregional migration are endogenous. The poorer region exhibits both lower wages and higher unemployment rates, and migrants to the richer region are disproportionally skilled. The brain drain from the poor to the rich region is accompanied by stronger incentives to acquire skills even for immobile workers. Regional shocks tend to affect both regions in a symmetric fashion, and skilled-biased technological change reduces wages of the unskilled. Both education and migration decisions are distorted by a uniform unemployment compensation, which justifies a corrective subsidization.
Keywords: Brain drain, Brain gain, Education, Unemployment, Interregional migration, Externalities
JEL Classification: H23, I20, J61, J64, R10
Suggested Citation: Suggested Citation
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