Skilled Emigration and Skill Creation: A Quasi-Experiment

Abstract

Does the emigration of highly-skilled workers deplete local human capital? The answer is not obvious if migration prospects induce human capital formation. We analyze a unique natural quasi-experiment in the Republic of the Fiji Islands, where political shocks have provoked one of the largest recorded exoduses of skilled workers from a developing country. Mass emigration began unexpectedly and has occurred only in a well-defined subset of the population, creating a treatment group that foresaw likely emigration and two different quasi control groups that did not. We use rich census and administrative micro-data to address a range of concerns about experimental validity. This allows plausible causal attribution of post-shock changes in human capital accumulation to changes in emigration patterns. We show that high rates of emigration by tertiary educated Fiji Islanders not only raised investment in tertiary education in Fiji; they moreover raised the stock of tertiary educated people in Fiji-net of departures.