No. 34 - Brain gain in the age of mass migration

The relationship between emigration and human capital is a hotly debated issue. Nowadays discussions focus mainly on the so called brain drain, i.e. the reduction in the human capital endowment of a country due to the emigration of more skilled people. Differently, this paper investigates whether and how the Italian emigration of the early twentieth century induced a domestic increase in school attendance rates. Many historical clues suggest that this actually happened in Italy at the turn of the nineteenth century. At least three rationales lie at the heart of such a relationship: first, emigration or its prospects increase the expected return to schooling thus making education more attractive; second, return migration could fuel a rise in school attendance via monetary and non-monetary channels; third, remittances could help in relaxing the budget constraint that prevented people to invest in education. Using a new dataset at the city level and different econometric techniques, we find quantitative support that primary school attendance rates have been positively correlated with (and, arguably, partially caused by) emigration and return migration. We also find that remittances had a positive effect on schooling.