mended the introduction of a coherent ‡exible migration policy that allows for both temporary and permanent labor migrants (see Bauer and Kunze, 2004). In France, the Ministry of Labor established in 2002 a system to induce highly skilled workers from outside the EU to live and work in France. Given the apparent demographic problems and the aging of populations, the intensity of the brain drain could increase further during the next decades<sup>2</sup> .

What are the consequences for sending countries? The early literature - which dates back to the 1960s and 1970s (Grubel and Scott, 1966, Johnson, 1967, Bhagwati and Hamada, 1974, Kwok and Leland, 1982) - supports the view that skilled migration is bad for those left behind. This is the case if the migrants’ contribution to the economy is greater than his/her marginal product and/or if the education of skilled emigrants was partly funded by taxes on residents. The negative e¤ects of the brain drain for source countries have been reformulated in an endogenous growth framework (Miyagiwa, 1991, Haque and Kim, 1995, Wong and Yip, 1999). More recently, the e¤ects of migration prospects on human capital formation have been the focus of several studies (Mountford, 1997, Stark et al., 1998, Vidal, 1998, Beine et al., 2001), suggesting that such prospects may in fact foster human capital formation and growth in sending countries. The essence of the argument is that if the return to education is higher abroad than at home, the possibility of migration increases the expected return to human capital, thereby enhancing domestic enrollment in education<sup>3</sup> . More people, therefore, invest in human capital as a result of increased migration opportunities. This acquisition can contribute positively to growth and economic performance. Alongside the incentives to acquire education, other channels through which the brain drain may positively a¤ect the sending economy have also been proposed. These include a range of ”feedback e¤ects” such as remittances (Cinar and Docquier, 2004), return migration after additional knowledge (Stark and Helmenstein, 1997, Domingues Dos Santos and Postel Vinay, 2003) and skills have been acquired abroad, and the creation of business and trade networks (Dustmann and Kirchkamp, 2002, Mesnard and Ravallion, 2002) Understanding and measuring all the mechanisms at work would obviously help designing adequate policy responses to the brain drain. Until recently, there has been no systematic empirical assessment of the economic impact of the brain drain. Despite many case studies and anecdotal evidence, the main reason for this seems to be the lack of harmonized international data on migration by country of origin and education level (see Commander et al, 2004). In the absence of such empirical material, the debate has remained almost exclusively theoretical. In their in‡uential contribution, Carrington and Detragiache (1998, 1999) provided estimates of the

> 2See IOM (2003) and World Bank (2003) on the perspectives of brain drain in the twenty-...rst century.

> 3According to the IOM (2003), ”prospects of working abroad have increased the expected return to additional years of education and led many people to invest in more schooling, especially in occupations in high demand overseas”.

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