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Recent theoretical studies suggest that migration prospects can raise the expected return to human capital and thus foster education investment at home or, in other words, induce a brain gain. In a recent paper (Beine, Docquier and Rapoport, Economic Journal, 2008) we used the Docquier and Marfouk (2006) data set on emigration rates by education level to examine the impact of brain drain migration on gross (pre-migration) human capital formation in developing countries. We found a positive effect of skilled migration prospects on human capital growth in a cross-section of 127 developing countries, with an elasticity of about five per cent. In this paper we assess the robustness of our results to the use of alternative brain drain measures, definitions of human capital, and functional forms. We find that the results hold using the Beine et al. (2007) alternative brain drain measures controlling for whether migrants acquired their skills in the home or in the host country. We also regress other indicators of human capital investment on skilled migration rates and find a positive effect on youth literacy while the effect on school enrolment depends on the exact specification chosen.

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We evaluate the effect of education policies, welfare programmes, technology and demographics on the differential evolution of the skill premium and on the rise in education investment in France and the US. We use a computable general equilibrium model with overlapping generations of individuals and endogenous education decisions. Human capital has two substitutable components - experience and education - both of which evolve endogenously over time. We use an original method to calibrate our model properly on the post-war period and run counterfactual experiments to assess the relative contributions of the different exogenous variables. The expansionary French education policy boosted the supply of skills and kept the skill premium low. In contrast, increasing education costs in the US contributed to increased wage differentials by reducing the rise in educational attainment. Skill-biased technical change is key to understanding rising school attendance and skill premiums in the US. It has a less important role and appears to be delayed in France.

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