Highly Skilled Migrants and Brain Waste

The migration of highly-skilled individuals is a major phenomenon in a globalized world. The international mobility of talent has important implications for source and destination countries. To date, most studies have focused on the so-called brain drain (i.e. human capital emigration from developing countries). Recent research, however, has increasingly emphasized the phenomenon of brain waste: the underutilization of migrant education and skills in the host country. Such a labour market mismatch is often referred to as over-education (other terms are over-qualification, over-schooling or surplus schooling; the term educational mismatch is broader). Consider the example of a migrant scientist who works as a taxi driver. Immigrants are more likely to be over-educated than native workers. This is generally explained with imperfect transferability of human capital, labour market discrimination, lack of innate ability, lower quality of foreign schooling, or selectivity of immigration policy. Over-education has detrimental wage effects for immigrants, but they vary according to the heterogeneity of the skills the highly educated workers have when entering the labour market. For instance, weak skills in the host country's language tend to reduce the returns to over-education. Over-education is linked to reduced earnings, but it also plays an important role in migration decisions: over-educated workers are more likely to (re-) migrate.

Measures of over-education tend to be simplistic, comparing actual years/level of schooling in the country of origin and years/level of schooling required for the jobs. The level of formal education, however, is an imperfect proxy of overall skills, and more research is needed to determine whether apparent over-education is genuine over-education. Existing contributions in this direction highlight that over-education is weakly correlated with underutilization of skills: the worker’s educational attainment does not necessarily reflect her skills endowment. Traditional methods also fail to account for the heterogeneity in actual skills among workers with the same level of schooling. This can lead to biased estimates of the incidence over-education and labour market effects thereof.

Survey data that include detailed descriptions of immigrants’ human capital skills are of prime importance for making better inferences about brain waste. Such data are increasingly available and allow for innovative papers that shed new light on migrant over-education. Panel data is important for three reasons. First, it can document the persistence of over-education, and explore whether this persistence differs by migrants' characteristics. Second, econometric techniques can be used that control for unobserved ability. The omission of these can lead to biased estimates in cross-sectional analyses. Third, data that contain information on the utilization of skills allow the construction of measures of educational mismatch that incorporate the notion of skills mismatch.

Scope

This Research Initiative seeks innovative contributions that examine the (different) reasons and consequences of brain waste, including contributions to better measurement of skills-mismatch. Research questions include the propensity of immigrants to become self-employed as a result of over-education, their propensity to (re-)migrate due to over-education, or their likelihood to send remittances. We are particularly keen on contributions that fully account for the gender dimension of brain waste.

Furthermore, the current literature does not adequately address the question of the skills-mismatch a migrant would have experienced -- if any -- if he or she stayed in the country of origin. Notions of brain drain, and brain waste should ideally take into consideration these counterfactuals. After all, the migrant scientist working as a taxi driver may not have found adequate employment in the country of origin. While the Research Initiative clearly focuses on quantitative analyses, we welcome systematic and theoretically motivated multi-sited research on the reasons and mechanisms behind brain waste.

Contact: Didier Ruedin.

Image credit