Does aid induce brain drain? A panel data analysis

Recent evidence suggests that aid induces migration. This result is nevertheless not very informative from a policy perspective since what counts in terms of welfare consequences is the composition of migration. In this paper we focus on education and study which of skilled or unskilled migration is more sensitive to aid. More specifically we investigate the possible channels through which aid might affect self-selection among international emigrants and find that aid induces positive selection by easing the movement of highly qualified workers. Interestingly, we find that technical cooperation and bilateral aid have a significant influence on skilled migration but do not seem to affect unskilled migration significantly. On the other hand, aid targeted to development enhancement affects both categories but seems to have a larger effect on the former.