Brain drain is probably just totally wrong

Many people are concerned that allowing more immigration from the developing to the developed world will impoverish those who remain. Given the catchy name of “brain drain”, it is believed that the smartest and most capable of a nation will leave, making those who remain much more impoverished. Yet, this case is not at all theoretically clear. There are good reasons to believe that skilled emigration would actually leave the nation more skilled in the long run, not less. The empirical evidence points toward this being the case. (Observe the Wikipedia page. Note that while officially, the evidence is mixed, the articles in support of gains are much more serious, and the articles in support of drain are not particularly rigorous). Let’s take as an example this paper, by Abarcar and Theoharides from 2020. When the United States allowed more visas for Filipino nurses (who account for fully 40% of foreign born nurses in the US), it induced an increase in human capital so large it led to the Philippines having far more skill than before.

i. How??

The reason why smart people leaving leaves a place less smart is obvious. The reason this might not hold in the long run is more subtle. We must remember that the presence of immigration opportunities affects both supply and demand. By raising the returns to investing in those skills, you induce more investment. Let’s think about Kremer’s “O-ring theory of economic production” again. Countries can become stuck in lower equilibriums because your returns to skill are dependent on the investments everyone else is making. Having the option to move elsewhere can change everyone’s incentive for education, and get us to a higher equilibrium.

So not only is the microeconomic, quasi-experimental evidence set against brain drain being a thing, but its general predictions don’t pass a smell test. We would expect those places which have, by historical happenstance, far more open borders than comparable countries to be poorer, but this is not what we find. Puerto Rico, far from being drained of talent and impoverished, would be the richest country in Latin America, were it a country. (This is by GDP per capita or by median income — however you slice it, it’s doing well). 

And note that these arguments do not touch remittances in the slightest. People send money back home; the size of these flows is so large that they account for six percent of the GDP of low income countries. Immigration is just so big and so good, it is insane that we restrict it.