A new GLO Discussion Paper studies the brain drain, human capital, and inequality’s institutional impact in a model where a rent-seeking elite taxes residents and voicing affects the likelihood of regime change.

GLO Discussion Paper No. 866, 2021

A Political Economy and Voicing Model of the Institutional Impact of Brain Drain, Human Capital, Inequality and Country Size – Download PDF

by Docquier, Frédéric & Schiff, Maurice

GLO Fellows Frederic Docquier & Maurice Schiff

Author Abstract: Brain drain BD, human capital h, and inequality’s institutional impact is examined in a model where a rent-seeking elite taxes residents and voicing affects the likelihood of regime change. We find that BD and h’s impact on institutional quality (Q) are as follows: i) Q is a U-shaped function of BD, with maximum (minimum) at BD = 0 (0 ) BD1, and is maximized at BD = 0; vi) Q increases in a high (low) BD country under a host country’s immigration promotion (restriction); vii) a high BD country’s institutions improve (worsen) under a large (small) reduction in BD; viii) the latter is particularly relevant for small and micro states where BD and Q are likely to be greater than in large but otherwise similar countries.

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