The brain drain, educated unemployment, human capital formation, and economic betterment

Extending both the “harmful brain drain” literature and the “beneficial brain gain” literature, this paper analyzes both the negative and the positive impact of migration by skilled individuals in a unified framework. The paper extends the received literature on the “harmful brain drain” by showing that in the short run, international migration can result in “educated unemployment” and in overeducation in developing countries, as well as in a brain drain from these countries. A simulation suggests that the costs of the negative consequences of “educated unemployment” and overeducation can amount to significant losses for the individuals concerned, who may constitute a substantial proportion of the educated individuals. Adopting a dynamic framework, it is then shown that due to the positive externality of the prevailing, economy-wide endowment of human capital on the formation of human capital, a relaxation in migration policy in both the current period and the preceding period can facilitate “take-off” of a developing country in the current period. Thus, it is suggested that while a controlled migration of skilled individuals may reduce the social welfare of those who stay behind in the short run, it improves it in the long run

Religious participation and children\u27s education : a social capital approach

Based on the argument in both economic and sociological literature that religion is conducive to their children\u27s human capital formation, this paper provides a model of religious participation and explores a mechanism that “social capital affects children\u27s education, a la Coleman (1988). The model generates several interesting implications, which help explain some important stylized facts about education and religion. Further, in a dynamic setting, the model shows that there exists a steady state, in which individuals allocate a positive amount of time and resources to religious activities. Thus, it complements the existing literature \u27to explain why seemingly unproductive religions can be everlasting

Child labor and the interaction between the quantity and quality of children

This paper analyzes the impacts of child labor on the interaction between the quantity and quality of children in the spirit of Becker and Lewis (1973). It shows that without child labor, the quantity of children can be a normal good so that it increases with parental income under some fairly standard formulations. However, the correlation between fertility and parental income becomes negative when the role of child labor is considered. The model also implies that fertility increases with the wage rate of child labor. Moreover, it suggests that government intervention not only directly affects the supply of child labor, but also influences parents’ decisions on fertility, which indirectly determines children’s labor market participations

Sticky wage, efficiency wage, and Keynesian unemployment

This paper provides a model of involuntary unemployment by combining the insights of the sticky wage theory and the efficiency wage theory. It implies that employed workers tend to supply more effort in response to economic downturns. So, a negative shock to an economy has intriguing impacts on the unemployment. The model also shows that a negative demand shock may have a relatively small effect on output since changes in work effort serve to partially mitigate the effects of the shock. Moreover, it yields some implications that complement the existing “work-sharing” literature

Do the rich save more? : a new view based on intergenerational transfers

Do richer people have higher saving rates? The short-run and long-run consumption functions have different answers to this important question, which results in an important “consumption puzzle that was a focus of macroeconomic research in the 1950s and 1960s. 1n a recent empirical contribution, Dynan, Skinner and Zeldes (2004) revive this old question and make this “consumption puzzle more intriguing, by showing that the average propensity to consume decreases not only with current income but also with lifetime income. This paper provides a model that helps resolve this puzzle from an intergenerational perspective

Incentives and corruption in Chinese economic reform

This paper argues that, given the legacy of Chinese communism and its political structure, corruption, together with the threat of punishment for corruption and the selective enforcement of this threat, serves as a method of compensation that both satisfies the political objectives of the Communist Party and provides an effective inducement to local officials to promote economic reform