As developed nations alter their immigration policies to attract high-skill workers from abroad, the rate of human capital movement across borders— especially from the developing world—has surged in the recent past. However, increased high-skill emigration has more complex economic implications for a developing country than the obvious brain drain. This paper develops a game theoretic model based on Albert Hirschman’s Exit-Voice-Loyalty (EVL) concept and the Tiebout hypothesis to explain a citizen’s emigration decision. The outcomes of the game are applied to the human capital augmented Solow growth model to explore the effects of emigration on the source country’s economic growth. Theoretical results show that, under certain circumstances outlined by the EVL game, emigration can lead to increased human capital accumulation in a developing country in two ways. First, the prospect of emigration generates extra incentive for individuals to invest in education. Second, return migration triggered by the government’s reaction to foot-voting costs brings technological knowledge from the developed countries.
MyoLwin, AungMaw, "Economic Benefit of Foot-Voting: Game Theoretic Approach" (2010). Senior Independent Study Theses Archive. Paper 1024.
Economics | Mathematics
Bachelor of Arts
Senior Independent Study Thesis
© Copyright 2010 AungMaw MyoLwin