Don't Shackle Talent

The outflow of highly educated and skilled workers, often termed "brain drain", is a concern for many countries around the world that worried for losing a highly trained and knowledgeable component of their workforce. This concern has prompted many European governments in the last few decades to implement policies to revert the brain drain, by attracting nationals who migrated and other foreign professionals back to the home country. These policies often take the form of tax incentives, so that expats and returning migrants pay lower taxes on income for a period of time. While these policies have proven successful in reverting the brain drain, they remain controversial in the eye of the public, as many worry about the fairness of the tax discount and propose alternative policies to retain "brains" in the country, rather than trying to bring them back after they left. Ultimately, the controversy over these policies stems from the fact that international migration is a complicated phenomenon with many factors at play, which partly favor and partly disfavor countries of origin, such as the potential talent loss or the benefits from knowledge diffusion and stronger ties to the international economy.

How extenisve is the brain drain phenomenon? Answering this question is quite difficult, due to the scarcity of data that consistently tracks migrants across countries, which would require the collaboration of source and recipient governments. A useful source of data comes from patents, which provide intellectual property rights protection in many jurisdictions and, thus, allow to track inventors, a special category of high-skilled workers, across countries. This data reveals that inventors are highly mobile individuals. For example, EU countries tend to both attract inventors from all over the world, but also lose some to foreign countries, particularly the US. Overall, in the past two decades, about 6% of European inventors moved to the America, while only 0.5% of Americans moved to Europe. In fact, the US displays the largest brain gain in the world: about a third of all US inventions in recent years come from foreign immigrants, who prove to be a valuable asset to the American economy. Similar migration outflows are observed for other categories of highly skilled "knowledge workers". These numbers show that the brain drain is a substantial phenomenon that can affect the overall economy.
Understanding what policies can best tackle the drain on talents requires an analysis of the many forces at play in the international migration of highly skilled workers. The main concern associated with brain drain is the loss of talent for the origin country, which invests resources to educate and train individuals who then choose to leave. These migrants often leave their countries at the beginning of their careers to work abroad, instead of contributing their knowledge and skills to the national economy. On the other hand, there are also benefits to the home country associated with the international mobility of talent. Recent research shows that moving abroad enables highly skilled workers to gain knowledge and become more productive. In addition, these workers often create "bridges" between their destination country and their country of origin, helping diffuse new knowledge and technology back home, especially when they choose to return.

These positive and negative effects affect migration policy considerations. Critics of tax incentives to revert the brain drain argue that this policy encourages even more people to move abroad, since they anticipate that when they return they will enjoy a tax break. Some feel that this tax incentive is unfair to professionals who never left and that a better policy would be to retain talent in the home country to start with. However, seeking to retain talent by preventing international mobility would also impair the diffusion of new ideas and international cooperation that are crucial to the activity of knowledge workers and foster technological progress and economic growth. A more forward-thinking policy of cooperation between countries should recognize the value of human capital mobility and allow talents to move abroad and return easily, even repeatedly, in order to improve the diffusion of knowledge and the sharing of associated benefits between home and destination countries.