The International Migration of Knowledge Workers: When is Brain Drain Beneficial?

We consider the welfare effects of the emigration of workers who produce a public good (knowledge). We distinguish between the knowledge diversion and knowledge creation effects of such emigration, and show that the remaining residents of a country can gain from emigration, even when tastes for knowledge goods exhibit a kind of 'home bias'. In contrast to existing models of beneficial brain drain (BBD), our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration 'lottery'. Instead, they are driven purely by the public nature of knowledge goods, combined with differences in market size that induce greater knowledge creation by emigrants abroad than at home. BBD is even more likely in the presence of weak sending-country intellectual property rights (IPRs), or when source country IPR policy is endogenized.

Lab Labor: What Can Labor Economists Learn from the Lab?

This paper surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.personnel economics, principal-agent theory, laboratory experiments, labor economics

Consumers and the Brain Drain: Product Design and the Gains from Emigration

We consider the welfare effects of skilled worker emigration in a context where skilled labor plays a role in product design. We show such emigration can benefit the residents left behind, even when consumers’ tastes exhibit a form of home bias. This is because emigration improves the design of goods designed by skilled emigrants but consumed in the sending country. In contrast to existing models of beneficial brain drain, our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration “lottery”. Instead, they are driven purely by differences in market size that induce skilled emigrants to design better products abroad than at home.brain drain, international labor migration, product quality

Gender Discrimination in Job Ads: Theory and Evidence

We study firms' advertised gender preferences in a population of ads on a Chinese internet job board, and interpret these patterns using a simple employer search model. The model allows us to distinguish firms’ underlying gender preferences from firms’ propensities to restrict their search to their preferred gender. The model also predicts that higher job skill requirements should reduce the tendency to gender-target a job ad; this is strongly confirmed in our data. We also find that firms' underlying gender preferences are highly job-specific, with many firms requesting men for some jobs and women for others, and with one third of the variation in gender preferences within firm*occupation cells.discrimination, gender, China, internet, search

Do Women Prefer a Co-operative Work Environment?

Are women disproportionately attracted to work environments where cooperation rather than competition is rewarded? This paper reports the results of a real-effort experiment in which participants choose between an individual compensation scheme and a team-based payment scheme. We find that women are more likely than men to select team-based compensation in our baseline treatment, but women and men join teams with equal frequency when we add an efficiency advantage to team production. Using a simple structural discrete choice framework to reconcile these facts, we show that three elements can explain the observed patterns in the team-entry gender gap: (1) a gender gap in confidence in others (i.e. women are less pessimistic about their prospective teammates' relative ability), (2) a greater responsiveness among men to instrumental reasons for joining teams, and (3) a greater "pure" preference for working in a team environment among women.gender, cooperation, self-selection, confidence, experiment

The Effects of Lottery Prizes on Winners and their Neighbors: Evidence from the Dutch Postcode Lottery

Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners’ consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants.natural experiments, social interactions

Competition and the Ratchet Effect

The 'ratchet effect' refers to a situation where a principal uses private information that is revealed by an agent's early actions to the agent's later disadvantage, in a context where binding multi-period contracts are not enforceable. In a simple, context-rich environment, we experimentally study the robustness of the ratchet effect to the introduction of ex post competition for principals or agents. While we do observe substantial and significant ratchet effects in the baseline (no competition) case of our model, we find that ratchet behavior is nearly eliminated by labor-market competition; interestingly this is true regardless of whether market conditions favor principals or agents.ratchet effect, competition, experiment, private information, labor markets

Lab Labor: What Can Labor Economists Learn from the Lab?

This chapter surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, union-firm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally.

Gender Discrimination in Job Ads: Theory and Evidence

We study firms' advertised gender preferences in a population of ads on a Chinese internet job board, and interpret these patterns using a simple employer search model. The model allows us to distinguish firms' underlying gender preferences from firms' propensities to restrict their search to their preferred gender. The model also predicts that higher job skill requirements should reduce the tendency to gender-target a job ad; this is strongly confirmed in our data, and suggests that rising skill demands may be a potent deterrent to explicit discrimination of the type we document here. We also find that firms' underlying gender preferences are highly job-specific, with many firms requesting men for some jobs and women for others, and with one third of the variation in gender preferences within firm*occupation cells.

Bidding for Brains: Intellectual Property Rights and the International Migration of Knowledge Workers

We introduce international mobility of knowledge workers into a model of Nash equilibrium IPR policy choice among countries. We show that governments have incentives to use IPRs in a bidding war for global talent, resulting in Nash equilibrium IPRs that can be too high, rather than too low, from a global welfare perspective. These incentives become stronger as developing countries grow in size and wealth, thus allowing them to prevent the 'poaching' of their 'brains' by larger, wealthier markets.