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Brain Drain raises concern for Rich and Poor

Migration is a two-way street. Whilst much that is written about migration focuses on immigration, this week's Economist provides a focus on emigration. The statistics quoted for a range of countries show that people emigrating from countries include a higher proportion of tertiary trained than the general population. The concern then becomes, particularly for developing countries, that emigration will lead to a brain drain and therefore hinder the development of these countries. The balancing economic factor however is the effect of remittances paid back to families in originating countries of the emigrants. A study conducted by Philip Martin of the University of California at Davis, showed that remittances to Turkey from the United States in the 1980's drove up the going rate for dowries, caused inflation of land prices and propped up overvalued exchange rate. A similar study for Mexico indicated increased spending power being generated from remittances from emigrants.

Australian baby boomers are now experiencing the drift overseas of their children (now in their mid to late 20's) in similar proportions to themselves in the 1970s when Earls' Court in London became a home away from home for Australians. In terms of current flows of movement in and out of Australia, they can be balanced by the substantial numbers of backpackers from Europe now touring Australia and spending in our economy. It remains to be seen whether the baby boomers' children will stay on with high-paying jobs offshore relative the those they left in Australia, however most of the countries they have gone to have time limits. If this trend does continue it will exacerbate concerns about labour supply in Australia as the baby boomers move out the workforce into retirement.

Posted Friday, 11 October 2002

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