Micro Evidence of the Brain Gain Hypothesis: The Case of Cape Verde

Abstract

Does emigration really drain human capital accumulation in origin countries? This paper explores a unique household survey purposely designed and conducted to answer this specific question for the case of Cape Verde. This is allegedly the African country suffering from the largest brain drain, despite also having a fast-growing stock of human capital. Our micro data enables us to propose a novel, explicit test of brain gain arguments according to which the possibility of own future emigration positively impacts educational attainment in the origin country. The innovative empirical strategy we propose hinges on the ideal characteristics of our survey, namely on full histories of migrants and on a new set of exclusion restrictions. Our results point to a very substantial impact of the “brain gain” channel on the educational attainment of those who do not emigrate. Alternative channels (namely remittances, family disruption, and general equilibrium effects at the local level) are also considered, but do not seem to play an important role. Our findings are robust to the choice of instruments and the empirical model.