NBER WORKING PAPER SERIES
GLOBAL TALENT FLOWS
Sari Pekkala Kerr
William Kerr
Çaǧlar Özden
Christopher Parsons
Working Paper 22715
http://www.nber.org/papers/w22715
NATIONAL BUREAU OF ECONOMIC RESEARCH
1050 Massachusetts Avenue
Cambridge, MA 02138
October 2016
This paper is a draft for the Journal of Economic Perspectives. We thank the editors and staff of
the Journal of Economic Perspectives for their very helpful comments and expert guidance. We
are grateful to Zovanga Kone for his assistance with the data work. Our research has been
generously supported by the Alfred P. Sloan Foundation, the Kauffman Foundation, the National
Science Foundation, the Smith Richardson Foundation, and Harvard Business School. Özden
acknowledges financial support from the Knowledge for Change Program and the Multidonor
Trust Fund for Trade and Development of the World Bank. The findings, conclusions, and views
expressed in this paper are entirely those of the authors. They should not be attributed to World
Bank, its executive directors and the countries they represent. Sari Pekkala Kerr is Senior
Research Scientist, Wellesley Centers for Women, Wellesley College, Wellesley, Massachusetts.
William Kerr is MBA Class of 1975 Professor of Entrepreneurial Management, Harvard Business
School, Boston, Massachusetts, and Faculty Research Associate, National Bureau of Economic
Research, Cambridge, Massachusetts. Çaglar Özden is Lead Economist, World Bank
Development Research Group, Washington, DC. Christopher Parsons is Assistant Professor of
Economics, University of Western Australia, Perth, Australia, and Research Associate,
International Migration Institute, University of Oxford, Oxford, United Kingdom.
NBER working papers are circulated for discussion and comment purposes. They have not been
peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies
official NBER publications.
© 2016 by Sari Pekkala Kerr, William Kerr, Çaǧlar Özden, and Christopher Parsons. All rights
reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit
permission provided that full credit, including © notice, is given to the source.
Global Talent Flows
Sari Pekkala Kerr, William Kerr, Çaǧlar Özden, and Christopher Parsons
NBER Working Paper No. 22715
October 2016
JEL No. F15,F22,J15,J31,J44,L14,L26,O31,O32,O33
ABSTRACT
The global distribution of talent is highly skewed and the resources available to countries to
develop and utilize their best and brightest vary substantially. The migration of skilled workers
across countries tilts the deck even further. Using newly available data, we first review the
landscape of global talent mobility, which is both asymmetric and rising in importance. We next
consider the determinants of global talent flows at the individual and firm levels and sketch some
important implications. Third, we review the national gatekeepers for skilled migration and broad
differences in approaches used to select migrants for admission. Looking forward, the capacity of
people, firms, and countries to successfully navigate this tangled web of global talent will be
critical to their success.
Sari Pekkala Kerr
Wellesley College
106 Central Street
Wellesley, MA 02481
skerr3@wellesley.edu
William Kerr
Harvard Business School
Rock Center 212
Soldiers Field
Boston, MA 02163
and NBER
wkerr@hbs.edu
Çaǧlar Özden
1818 H street NW
The World Bank
MC3-303 DECRG
Washington, DC 20433
cozden@worldbank.org
Christopher Parsons
Economics (UWA Business School)
The University of Western Australia (M251)
35 Stirling Highway
CRAWLEY WA 6009
Australia
christopher.parsons@uwa.edu.au
2
Introduction
Highly skilled workers play a central and starring role in today’s knowledge economy. Talented
individuals make exceptional direct contributions—including breakthrough innovations and scientific
discoveries—and coordinate and guide the actions of many others, propelling the knowledge frontier and
spurring economic growth. In this process, the mobility of skilled workers becomes critical to enhancing
productivity. Substantial attention has been paid to understanding the worldwide distribution of talent and
how global migration flows further tilt the deck. Observed migration flows are the result of a complex
tangle of multinational firms and other employers pursuing scarce talent, governments and other
gatekeepers trying to manage these flows with policies, and individuals seeking their best options given
the constraints imposed upon them.
We begin by sketching the landscape of global talent mobility. The number of migrants with a tertiary
degree rose nearly 130 percent from 1990 to 2010, while low skilled (primary educated) migrants
increased by only 40 percent during that time. A pattern is emerging in which these high-skilled migrants
are departing from a broader range of countries and heading to a narrower range of countries—in
particular, the United States, the United Kingdom, Canada, and Australia. The globalization of economic
ties is also leading to a rise in shorter-term and circular migration patterns for skilled labor; for example,
global companies often insist that their rising executives live and work in other countries for a meaningful
portion of their careers. We also give examples showing how global migration may be most pronounced
for those at the very outer tail of the talent distribution and that female high-skilled migration
outnumbered males in 2010.
Next, we discuss the causes and consequences of high-skilled migration. We start with a basic model of
the income incentives to migrate for different skill levels. We then expand the discussion to include
important factors like advantages of agglomeration, productivity spillovers, intra-firm relocation of
employees in multinationals, and how tertiary and graduate education abroad is linked to future job
opportunities in other countries. These factors also suggest why high-skilled immigration is often
controversial. For recipient countries, high-skilled immigration is often linked to clusters of technology
and knowledge production that are certainly important for local economies and are plausibly important at
the national level. More than half of the high-skilled technology workers and entrepreneurs in Silicon
Valley are foreign-born. For native workers, high-skilled immigration means both greater competition for
certain jobs, but also a chance to benefit from the complementarities and agglomeration effects created by
talent clusters. For sending countries, the loss of high-skilled workers raises concerns over “brain drain.”
On the positive side, high-skilled emigrants can create badly needed connections to global sources of
knowledge, capital, and goods—and some will eventually return home with higher social and human
capital levels.
With these controversies and tensions in mind, we then review the “gatekeepers” for global talent flows.
At the government level, we compare the points-based skilled migration regimes as historically
implemented by Canada and Australia with the employment-based policies used in the United States
through mechanisms like the H-1B visa program. Because of the links of global migration flows to
employment and higher education opportunities, firms and universities also act as important conduits,
making employment and admission decisions that deeply affect the patterns of high-skilled mobility.
There are ongoing efforts in many countries to tweak their immigration policies concerning high-skilled
3
labor to tilt the social cost-benefit calculations in a more favorable direction. Looking forward, the
capacity of people, employers and governments to successfully navigate this tangled web of global talent
markets will be critical for their success.
Trends in Global Talent Flows
Approximately 3 percent of the world’s population lives in a country different from that of their birth and,
despite the impression sometimes presented in the media, this share has been roughly constant since 1960
(Özden et al. 2011). Beneath this stable overall level, however, global migration patterns have become
increasingly asymmetric and skewed along several dimensions, especially as skilled migration has
become a greater force globally.
Most of the data concerning high-skilled migration that we discuss here are taken from global bilateral
migration database as described in Docquier et al. (2009), in addition to the recently completed update of
the Database on Immigrants in OECD Countries (DIOC) for 2010 (Arslan et al. 2014).
1
These databases
report the stock of migrants by education level from each home country that have moved to each
destination country. High-skilled workers, our main focus, are defined as those with at least one year of
tertiary education. The data come from decennial national censuses conducted in 1990, 2000 and 2010 in
the destination countries (where available) or from labor force surveys (when necessary). The data
presented cover people of working age (25+) and are matched according to individual countries’
definition of migration, which typically pertains to country of birth.
2
Figure 1 compares migration to OECD countries along multiple dimensions. There were about 28 million
high-skilled migrants residing in OECD countries in 2010, an increase of nearly 130 percent since 1990.
By comparison, the growth rate for low-skilled migrants in the OECD countries from 1990 to 2010 was
only 40 percent. (Throughout, we use the term ‘low skill’ to designate migrants with only primary
education and ‘other skill’ to refer to those not classified as high-skilled.) While OECD countries
constitute less than a fifth of the world’s population, these countries host two-thirds of high-skilled
migrants (OECD Factbook 2013; Artuç et al. 2015).
The exceptional rise in the number of high-skilled migrants to OECD countries is the result of several
forces, including increased efforts to attract them by policymakers as they recognize the central role of
human capital in economic growth, positive spillovers generated by skill agglomeration, declines in
transportation and communication costs, and rising pursuit of foreign education by young people. Among
the resulting effects are the doubling of the share of the tertiary-educated in the labor force and fierce
competition among countries hoping to attract talent (for example, Kapur and McHale 2005; National
1
The 2010 update was developed by the OECD, the World Bank and the International Migration Institute at Oxford
University. The details of the databases, their construction, methodology and the main patterns are discussed in
Arslan et al. (2014). There is a parallel DIOC-E database for non-OECD countries
(
http://www.oecd.org/els/mig/dioc.htm) described by Artuç et al. (2015).
2
To achieve harmonized and comparable series over the 20-year period, we exclude Chile, Estonia, Israel, Slovenia,
and South Korea from our analysis. Throughout this article, we use ‘OECD’ to refer to the 29 remaining members,
irrespective of their date of joining the OECD.
4
Academies 2016). While the migration of low-skilled workers mainly offsets the decline in low-skilled
native workforces in advanced countries, high-skilled migration often complements the growth of skill
levels for native workforces.
Even among OECD destinations, the distribution of talent remains skewed. Four Anglo-Saxon
countries—the United States, the United Kingdom, Canada and Australia—constitute the destination for
nearly 70 percent of high-skilled migrants (to the OECD) in 2010. The United States alone has
historically hosted close to half of all high-skilled migrants to the OECD and one-third of high-skilled
migrants worldwide. In 2010, the United States hosted 11.4 million skilled migrants, 41 percent of the
OECD total. The attractiveness of English-speaking, high-income countries for high-skilled migrants has
led other destination countries, such as France, Germany and Spain, to increase their efforts to attract
these workers. Nevertheless, the volume of skilled migration to the four Anglo-Saxon countries, coupled
with the significant asymmetry in the concentration of leading universities, high-tech firms and research
centers, implies that the global competition for skills will continue to be fierce and will likely remain
unequal.
Such stark inequalities in the concentrations of talent also exist across regions and cities within individual
destination countries. In 2013, Southern California, Silicon Valley and New York City combined to host
around one-eighth of total STEM employment (that is, jobs with a high component of science,
technology, engineering and mathematics) in the United States (Silicon Valley Competitiveness and
Innovation Report 2015). Moreover, 56 percent of STEM workers and 70 percent of software engineers in
Silicon Valley in 2013 were foreign born. Elsewhere, Western Australia has the highest percentage of
foreign-born medical practitioners at around 60 percent in 2011. London, New York, Paris, and Milan
continue to maintain their positions as the global capitals of finance as well as fashion.
Agglomeration can be even starker in the upper tail of the talent distribution (Stephan and Levin 2001;
Wasmer et al. 2007; Stephan 2010; Weinberg 2011). Trends in the awarding of the Nobel Prizes for
Chemistry, Medicine, Economics and Physics, where an institutional affiliation can be assigned with
certainty, illustrate particular broad patterns. Since 1901, individuals affiliated with institutions in four
countries—the United States (330 individuals), the United Kingdom (90), Germany (69) and France
(33)—have been awarded over 80 percent of these Nobel Prizes.
3
The US domination of these awards is
fueled in large part by emigration of prominent scientists. In the first third of the time period since 1901, 9
percent of these Nobel Prize winners were born in the United States and 13 percent were affiliated with
US institutions at the time of their winning. In the most recent third of the time period, however,
academics associated with American institutions have won over 65 percent of these Nobel Prizes, yet only
46 percent of this group was born in the United States. Of all Nobel Prizes across the four subject areas,
31 percent (203 of 661) have been awarded to immigrants, of whom 53 percent (107 of 203) were
affiliated with American institutions. The asymmetry of the flows is remarkable. Only four Americans
were affiliated with non-American institutions when they received the award, out of 230 total Nobel
3
Data for Nobel prizes is derived from https://www.aggdata.com/awards/nobel_prize_winners, supplemented
with data from the Nobel Prize website for the years 2011-2015.