Skilled migration and education policies: Is there still scope for a Bhagwati tax?

Domenico Scalera

MPRA Paper from University Library of Munich, Germany

Abstract: The Bhagwati brain drain tax proposal dating back to more than thirty years ago has been criticized from different viewpoints. In particular, recent literature has pointed out that this tax would hamper accumulation of human capital by reducing gains from skilled migration. In this paper, it is argued that when taking into account social externalities of human capital, and optimal policies implemented by a government caring only for left behind residents, a brain drain tax tends rather to foster the investment in human capital and increase residents’ income and welfare. The Bhagwati tax could even be universally welfare improving. In fact, if the tax is paid by migrants in addition to the ordinary income taxation, their larger fiscal burden might be outweighed by a higher human capital and gross income. Alternatively, if the transfer is financed by the destination country, its fiscal losses might be outweighed by the advantage of more skilled immigrants.

Keywords: Skilled migration; education policies; Bhagwati tax (search for similar items in EconPapers)
JEL-codes: H52 J24 O15 (search for similar items in EconPapers)
Date: 2009-12-18
New Economics Papers: this item is included in nep-hrm, nep-lab and nep-mig
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: SKILLED MIGRATION AND EDUCATION POLICIES: IS THERE STILL SCOPE FOR A BHAGWATI TAX? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19643

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