The ‘Brain Drain’ Is a Bad Argument for Closed Borders

Nativist concern trolling is unconvincing

Imagine a skilled worker with a physical injury that reduces his productivity by 75 percent. The injury may be that his ears register loud sounds that don't exist, but even with this injury he is still more productive than most other disabled people. Many people suffer the productivity effects of such an injury today by being trapped in countries with mediocre institutions, which rob them, their families, and the world of their productive potential. He could effectively cure his handicap for the price of a plane ticket to the United States.

Nobody would say the disabled person described should remain handicapped because doing so increases the average productivity of other people with his condition. However, nativists who use the “brain drain” argument for closed borders argue that the injured person should not seek to cure himself because it would diminish the average productivity of other disabled people.

The brain drain argument against immigration says that the emigration of productive individuals from poor countries to more developed countries robs the poorer states of the human capital they require to develop economically. Rich countries allegedly are robbing poor countries of the very factors of production required to build themselves out of poverty.

Some modern immigration restrictionists, among others, use the brain drain argument as another justification for the nativist policy positions they already hold. However, this argument falls short and amounts to little more than concern-trolling to justify their current nativist positions. 

What is the Brain Drain?

The term "brain drain" was invented by post-WWII Brits worried about the most talented British scientists emigrating to Canada and the United States for higher incomes and more opportunities. Even then, the NHS wasn't enough to convince the most talented Brits to stay. In that way, emigration ensures that poor countries like the UK (I jest) will remain poor because they're deprived of their most valuable resource: Skilled, educated, and productive humans.

Many rich governments, commentators in the developed world, and writers in developing countries argue that the brain drain is robbing economic potential today. Many first-world nativists also use the brain drain claim as pretty packaging around a nativist argument. Political scientist Samo Burja contends that economists are lying to you on Twitter X.

“Short of coming under a communist dictatorship or being subjected to US-style ‘regime change,’ it's hard to think of anything worse for a developing country than the emigration of its most talented individuals,” wrote Noah Carl.

Being stuck in a country with bad economic and political institutions like Haiti, Lebanon, Niger, or Ecuador is terrible. The brain drain argument, if seriously entertained, would be like imposing disabilities on highly productive people with roughly zero benefits.

Most emigrants emigrate for economic reasons. Coming to the United States from a developed country raises the real cost-of-living-adjusted wage for identical workers by about 2-15 times (depending on the specific estimate). Their wages are much higher in the developed world because labor demand is much greater here. Why? As I've written before, the demand for labor is

[D]etermined entirely by the marginal value product (MVP) of the worker. The MVP is the quantity of goods or services supplied by a worker multiplied by the market price for those goods (marginal physical productivity times market price). You see, employers value the tasks that they pay for because they can sell what the employees produce to consumers for a profit. Employers will hire a worker if his wages are below the worker's MVP. In such a situation, the employer will pay less to the worker than he will receive in revenue from the worker's production – meaning that it is profitable to employ him (if MVP is equal to the wage, then the employer is indifferent to hiring the worker, controlling for transaction costs). Immigrants have higher wages in the United States because their MVP is higher here than in their home countries. In other words, immigrants have higher wages in the United States because they are more productive here.

Immigrants come because they get a higher return on their labor in the United States. There is lost economic potential in poor countries. But that potential is less than it would be in the developed country because of other problems in poor countries that are not solved by locking in their most productive citizens. By locking them out of the developed world, closed borders guarantee lower wages, meaning they will be less productive. This means they and the world will be poorer than they otherwise would be.

The Brain Drain Assumes Location-Independent Productivity

Productive emigrants leave because they can’t be as productive in their home countries. The implicit assumption of brain drainers is that immigrants would have been similarly productive in their home countries. If Elon Musk had stayed in South Africa, the argument goes, he would have started the South African equivalents of PayPal, SpaceX, and Tesla there and South Africa would have been much richer. But this ignores the reasons why emigrants leave for economic opportunities: They can’t start those firms in their home countries or can’t find such high-paying jobs there.

If Musk had stayed, he would have had to serve in the Apartheid-era military and then build his companies under the corrupt and kleptocratic governments of Apartheid and post-Apartheid South Africa. We wouldn't know his name if he'd stayed behind, and the world would be poorer as a result, although he may have been successful by South African standards.

Proponents of brain drain also model a world where national economies are separated from each other, where economic growth in one country doesn’t affect others and there’s no trade. But that’s not reality. They’re all economically linked in different ways and growth in one place benefits another place.

In our world, where Musk emigrated, South Africans benefit from his entrepreneurship through trade; they would have gained far less had he been locked in Pretoria. South Africans (under certain legal conditions that would have hobbled the creation of the firm there) and the rest of the world can use PayPal and drive Teslas.

The choice was not between Elon Musk founding PayPal and Tesla in South Africa or in the United States. The choice was between Paypal and Tesla being founded in the United States or never being founded at all in South Africa.  

Does Locking Skilled Workers in Poor Countries Boost Growth?

The crux of the brain drain argument is the assumption that locking higher-skilled immigrants out of the developed world would increase growth in poor countries. However, the extra economic growth would have to be extraordinarily high to compensate for the immigrants’ lost economic gains. After all, economic growth is good because it increases the standard of living for people and not for geography. Using geography to talk about growth is just a placeholder for discussing the growth experienced by the people who are there. So let’s look at how people are affected.

A closed border can't produce more global wealth than free movement, or even restricted movement, under any plausible scenario. Even the unlikely (impossible?) doubling of economic growth from locking skilled immigrants in poor countries would take generations to make up for the economic loss of just a few years of closed borders even without discounting future gains.  

A Haitian example shows how spurious the brain drain argument is. Average Haitian annual GDP growth has been about 1.4 percent over the last 25 years, and their GDP per capita PPP is $3,305. Average U.S. growth has been about 2.3 percent over the same period, and GDP per capita PPP is currently about $77,000. For the sake of argument, assume that there are currently zero Haitians in the United States. If ten percent of Haitians moved to the United States and were ten times more productive here, the average production of all Haitians here and in Haiti would about double (90 percent increase) in the first year to $6,280.

Alternatively, assume that locking all Haitians in Haiti would double their GDP growth rate – an extremely generous and unrealistic assumption that favors the brain drainers. Under that scenario, it would take until 2045 for the average Haitian to have a standard of living that they could have tomorrow if only ten percent of them came to Florida.

Take the more extreme scenarios of 1) all Haitians moving to the United States or 2) all Haitians being locked in Haiti with a doubled growth rate. In the case of all Haitians moving here, their average GDP per capita PPP would rise to $33,050 tomorrow. In the locked-in scenario with a doubled growth rate, it would take until 2106 for the average Haitian GDP per capita PPP to reach $33,050. It would take generations of higher growth for the standard of living in Haiti to rise to the level for Haitians living in Florida today.

Do Countries with More Skilled Emigration Grow Slower?

Do poor countries grow more slowly when their skilled citizens emigrate? Figure 1 plots the change in real GDP per capita PPP from 1990 to 2010 against the high-skilled emigration rate in 1990 for the 150 countries where data are available (excluding Equatorial Guinea, a newly oil-rich small nation that makes the figure unreadable). There’s a barely positive correlation between the high-skilled emigration rate in 1990 and increases in real GDP per capita PPP in those countries of origin (the results are the same when Equatorial Guinea is included).

The results are essentially unchanged when the independent variable is the average emigration rate over the 1990-2010 period. The change in real GDP per capita PPP is not logged because that would exclude the countries where it shrank over the period, which would bias the results in my favor. It’s safe to say that high-skilled emigration and growth aren't correlated in this simple example.

Figure 1

Change in Real GDP Per Capita PPP from 1990-2010 and the 1990 Emigration Rate

Sources: World Bank and Institute for Employment Research.

Emigration Often Helps Poor Countries

The Heckscher–Ohlin model of international trade argues that countries export products made with relatively abundant (cheap) factors of production and import products made by relatively scarce (expensive) factors. In other words, countries export what they can make cheaply and import what they can only make at a higher cost. Poor countries have many workers and don't have much cash, so people leave the poor countries and seek work in the developed world where their wages are higher. Many migrants then send remittances home as cash that their families use for myriad purposes. In 2022, there were $626 billion in remittances to poor and middle-income countries. In this simple way, poor countries export workers and import cash.

The individual is the proper unit of analysis to evaluate whether this pattern of movement is a net positive. The emigrants gain and Americans gain by hiring the migrants and selling to them, and their families who remained behind gain by receiving remittances. The migration is voluntary and mutually beneficial. After all, the prosperity of people matters more than the prosperity of an arbitrary geographical location.

Even more important than cash, the possibility of emigration increases the productivity of workers who remain by incentivizing them to acquire valuable skills. For example, the U.S. medical industry aggressively recruited Filipino nurses for a time. The mere possibility of getting a visa and earning much higher pay in the United States incentivized many Filipinos to enroll in nursing school. Nine additional nurses were licensed for each nurse who emigrated from the Philippines. Many even switched from other degrees because the wage return on their investment was so much higher. The possibility of emigrating increased human capital in the Philippines with positive spillover benefits. Without the emigration option, the Philippines would have had fewer skilled workers.

The Indian IT industry is another prominent example. The large number of skilled Indian immigrants who worked in Silicon Valley “helped diffuse knowledge through a variety of mechanisms: skill upgrading for those working in the United States, with diffusion to India through return migration and brain circulation.” More directly, skilled Indian emigrants established many companies, opened offices in India, and then grew the technology sector there. In turn, those companies lobbied for deregulation and fewer barriers to business formation. The Indian technology industry would be a fraction of its size without Indian emigration. It's hard to imagine how locking higher-skilled Indians in India would have created businesses as productive and profitable as the Indian IT industry became.

As economist Michael Clemens has written, regulating the flow of immigrants does nothing to change the underlying economic conditions that caused migrants to want to move anyway. Instead, it imposes enormous costs on everyone without evidence that it boosts growth in poor countries. Many smart and productive people are born in economic backwaters in developed countries and move to richer regions for opportunity.

 Oprah Winfrey was born on a Mississippi farm in 1954. She was raised in Milwaukee and made her way to Nashville, where she landed a job in radio in high school before earning billions of dollars. She wouldn't have achieved similar success had she stayed in Mississippi, nor would Mississippi be any wealthier today if Oprah had been confined there. Just imagine her trying to run her talk show from the Mississippi countryside.

Return migration is often how cash and knowledge travel to developing countries. Migrants who return with new experiences, technology, skills, capital, attitudes, or other valuable insights supply the productive capacity necessary for growth. Outside of normal economic factors, there is substantial literature on how migrants who stay and return influence economic and political freedom in their home countries. When those migrants go to economically liberal and democratic countries, they transmit those values back home directly when they return and indirectly through communication. When migrants reside in illiberal, undemocratic societies like Russia and Saudi Arabia, they transmit those values home, too. But since most migrants are in the freer world, the net effect is positive. The migrants don’t even have to return permanently. Merely establishing businesses in their home countries or communicating with their former fellow countrymen helps this process.

Poor countries export labor and import capital, cash, new ideas, and mostly better institutions. Those imports tend to boost growth in most cases, with some exceptions. The result is not a brain drain but the creation of a brain bank whereby those left behind, immigrants, and natives can gain valuable knowledge.

Emigration Helps Poor Countries Reform Their Poor Institutions

Most people don’t have a theory about why some countries are rich and others are poor, but migrants typically have experience in both places and generally think that rich countries and their citizens do things better. Roberto Mandujano was a Mexican immigrant living in the United States who crossed the Rio Grande when he was 17 before returning to Mexico years later. This line from a news story that featured Mandujano stuck out:

Mandujano said he had an epiphany one Sunday in a Houston park while drinking a can of beer on his day off and watching Americans jog around him.

“I thought: ‘What am I doing?’ ” he said. “I went out and bought a pair of running shoes the next day.”

Elsewhere in the story we find out that Mandajuno is "Now back home in Mexico, he runs half-marathons on the weekends and owns a well-stocked store (‘my little Home Depot’) and a U.S. green card, traveling back to Texas whenever he wants.”

But migrants and returnees don’t just change their daily habits; they can also help change institutions. Poor countries have poor institutions that don't incentivize production. By institutions, I mean economic rules and their enforcement mechanisms. Two examples of economic institutions are property rights and contract rights. When those institutions function well, they incentivize people to invest, build, sell, and create new goods and services because they capture much of the benefit and are relatively secure in that their property won't be stolen and that people who sign contracts will honor them.

A big question in economic history is why some countries adopted these productive institutions and others didn't. Interestingly, immigration and the threat of emigration can motivate a government to improve its economic institutions.

The emigration of many skilled and ambitious people often prompts poor countries to reform their institutions to prevent the exodus. Migrant communication and voting from abroad, where the migrants are safely distant from political repression, is one way that they affect institutions in their home countries. Another is that the possibility of emigration makes citizens bolder in demanding economic and political reforms because they know they can always flee if they face repercussions for being too outspoken. Remittances sent by emigrants abroad can also break the back of corrupt patronage systems that prevent reform. As Michelangelo Landgrave and I wrote:

Emigrants can directly affect the political institutions in their home country without returning home. For instance, Mexican emigrants to the United States aided in the fall of the Institutional Revolutionary Party (PRI), which controlled Mexican politics for nearly a century. Monetary remittances from emigrants decreased the electorate's reliance on the PRI's political machine for basic public goods such as roads and schools. This diminished reliance slashed the cost of voting against the PRI. Emigrants also transmitted back values on government transparency, accountability, and other cultural norms. This contributed to the historic 2000 election of Vicente Fox, the first non-PRI president in nearly a century.

Emigration is a threat to government plans in the developing world. During a dispute with the Mexican government over a guest worker visa in the 1950s, the U.S. government decided to let Mexicans show up for a visa instead of being preselected by the Mexican authorities. This violated Mexican law, and their government deployed troops to stop the exodus. Earlier, the Mexican government even vetoed a U.S. proposal to let Mexican migrant farmworkers bring their families because they were afraid the Mexicans wouldn’t return.

Uncontrolled emigration was a threat to the Mexican government’s economic plans that depended upon a large supply of Mexican workers, but the workers had different ideas: Moving North to immediately increase their income rather than wait for the Mexican government to select winners and losers, apportion subsidies to politically connected businesses, carry out additional corrupt land reform, and decide what projects entrepreneurs should pursue.

Government economic plans use the force of law to channel individual investment, skill, and labor toward those plans that have lower private economic returns than market activities. If those government plans had higher or similar returns to market investments, the government wouldn't have to create the plans in the first place because entrepreneurs would already be carrying them out.

Developed countries pursue economic plans by spending lots of money and changing regulations through industrial policy. Poor countries pursue their plans more through regulatory changes like capital controls, export bans, and immigration and emigration restrictions to lock in productive assets to be used for government plans.

Emigration, like capital flight, limits the ambitions of government economic plans in poor countries. That's good, given the poor track records of such policies. There may be exceptions. Despotic governments like Cuba push people out as a means of maintaining the regime. But Communist countries mostly have emigration restrictions and sometimes build fortifications like the Berlin Wall to keep people in.

Russian Brain Drain

Noah Carl wrote that many pro-immigration folks are arguing for policies to drain the brains of authoritarian regimes such as Russia and China in a bid to weaken them. The emigration of skilled scientists and technicians means they won't be able to work on national weapons programs in their home countries or boost national defense. As was the case in other poor countries, emigration siphons people away from ineffectual government economic plans toward freer markets that produce good outcomes. Just replace the phrase "government economic plans" with "war" and the logic is the same.

The emigration of many skilled Russians is one of the long-term effects of Russia’s invasion of Ukraine that will undermine the Russian state’s ability to wage war. Many skilled scientists fled the Nazis before, during, and after World War II. You could read this section and think, "If the emigrants weaken the state's ability to fight a war by depriving the state of human capital, it would also deprive firms of human capital and constrain their expansion." That’s true, but skilled emigrant workers are being underutilized and relatively unproductive in poor countries today – which is why they emigrate in the first place.

The remittances, knowledge transfers, and return migration all counteract that potential cost while immediately increasing the income of the migrant by allocating him to more productive work overseas. During a war when remittances, knowledge transfer, and return migration are limited or stopped altogether, the negative effects of the brain drain on the sending country dominate and are something to celebrate.

Conclusion

The mean, misanthropic reputation that nativists have has prompted some of them to try to show that immigration restrictions are actually good for the immigrants and the countries they come from. In that way, nativists argue that their policies are nothing but tough love and don't come from a xenophobic perspective. “No, no, no, the nativists are the ones who care about immigrants and foreigners the most,” their complaints about brain drain seem to mean. Recently, this has taken the form of Border Patrol agents saying that less immigration enforcement leads to more migrant deaths. The most respectable version is the “brain drain” argument and it doesn’t hold any water.

---