Brain Drain and Factor Complementarity

In this paper we develop an extended Solow growth model with emigration
which aggregates different types of labor skills from strict complementarity to
perfect substitution. The derivation of balanced growth paths shows that the most
relevant cases for studying the impact of emigration are those where these paths can
only be attained asymptotically. This requires and justifies the need for using transitional
dynamics. We therefore derive a complete characterization of the transitional
dynamics of output and wages in the sending country for all possible values taken
by the elasticity of substitution between skilled and unskilled workers. The model
then serves to qualitatively study the effect of brain drain on per capita income and
wages of the sending country.