We consider the case in which the opening up of an economy to migration results in departure of skilled workers. We point out that while the possibility of migration changes the set of employment opportunities, it also affects the structure of incentives: Higher returns to skills in the foreign...

[Introduction:] Whatever workers may take with them when they migrate, they cannot possibly transfer their home country's information structure. Consequently, foreign-country employers are not as well informed about home-country workers as are home-country employers. Typically, migration runs...