Ability drain

Abstract

Brain drain effects of migration has been studied extensively. Ability drain has not. While data constraints impede assessments of the extent of ability drain, it is suggestive that immigrants or their children founded over 40% of the Fortune 500 US companies. This paper examines migration’s impact on productive human capital or ‘skill’ as a function of ability and education for source country residents and migrants under a points system that accounts for education (as in Canada pre-2015) and a ‘vetting’ system that also accounts for ability (as in the US H1-B visa program). It concludes that migration results in an ability drain that is larger than the brain drain; is more likely to result in a net skill drain than a net brain drain; that a vetting system is more likely to augment net skill drain; and that inequality in migrants' source countries raises both brain and ability drains.