Return Migration After Brain Drain: A Simulation Approach

TL;DR

This paper presents a simulation model analyzing individual return migration decisions after brain drain, highlighting how risk aversion and initial expectations influence the likelihood of returning.

Contribution

It introduces a novel simulation framework based on risk aversion and initial expectations to predict return migration, providing insights into the microeconomic decision-making process.

Findings

Return probability peaks when risk aversion exceeds initial expectation.

High initial expectation correlates with lower return likelihood.

The ratio of risk aversion to expectation is a key predictor of migration behavior.

Abstract

The Brain Drain phenomenon is particularly heterogeneous and is characterized by peculiar specifications. It influences the economic fundamentals of both the country of origin and the host one in terms of human capital accumulation. Here, the brain drain is considered from a microeconomic perspective: more precisely we focus on the individual rational decision to return, referring it to the social capital owned by the worker. The presented model compares utility levels to justify agent migration conduct and to simulate several scenarios within a computational environment. In particular, we developed a simulation framework based on two fundamental individual features, i.e. risk aversion and initial expectation, which characterize the dynamics of different agents according to the evolution of their social contacts. Our main result is that, according to the value of risk aversion and initial expectation, the probability of return migration depends on their ratio, with a certain degree of approximation: when risk aversion is much bigger than the initial expectation, the probability of returns is maximal, while, in the opposite case, the probability for the agents to remain abroad is very high. In between, when the two values are comparable, it does exist a broad intertwined region where it is very difficult to draw any analytical forecast.