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 analyse a unique natural quasi-experiment in the Republic of the Fiji Isalnds, 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 microdata 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.