Blog Post

Brainless recovery – brain drain in the aftermath of the crisis

Throughout the 2000s, European countries have been broadly successful at attracting large numbers of highly-skilled individuals. The euro area crisis has most likely significantly altered these pre-existing trends. As growth remains subdued and unemployment stabilises at high levels, spending cuts in R&D might leave countries in the periphery more exposed to “brain drain”.

By: Date: December 18, 2014 Topic: Macroeconomic policy

This blog post presents some of the broader findings of a chapter written for ‘The Handbook of Global Science, Technology, and Innovation’ (Archibugi D. and Filippetti A. eds.). The Handbooks of Global Policy series, Wiley-Blackwell, forthcoming 2015.

Over the past decade, as part of a broader globalisation trend, migration has been intensifying at global level. The number of migrants (aged 15+) in OECD countries increased by 38% between 2000 and 2010, to 106 million (see Arslan et al., 2014). Of these, about 35 million had tertiary education. However, some countries were more successful at attracting and retaining highly-educated workers than others. Although far from perfect, this measure can give us a sense of whether a country is on balance a brain gainer.

Building on the Database of Immigrants in OECD countries (DIOC), released a few weeks ago, Figure 1 details the net flow (immigrants minus emigrants) of highly-educated workers for selected OECD countries in 2010, normalized by population. Several interesting trends can be identified: (i) small countries at the heart of Europe (Switzerland, Luxembourg) had a particularly positive balance; (ii) within Europe, among the large countries, the UK was a top brain gainer; (iii) Ireland and Finland, in 2010, were seeing a larger outflow than inflow of highly-educated individuals.

Source: OECD, own calculations

Data on migration by educational attainment level is currently available only up to 2010. Although in normal times this would not be a major problem, given that migration patterns tend to be relatively stable in time, at the current juncture 2010 sounds like a remote past. As suggested by Machado and Walsh (2014), the euro area crisis, with its disruptive effects on the labour market and growth rates in several countries, is likely to have acted as a structural change also in terms of migration patterns of the highly educated. As now countries progressively return to growth, it will be interesting to observe whether these changes in migration patterns will prove temporary in nature or more permanent.

In certain European countries, my hunch is they will not be temporary. Veugelers (2014) shows how fiscal consolidation has led countries that were already ‘innovation laggards’ within the EU to cut disproportionately their Research and Innovation (R&I) expenditure with respect to other categories of public expenditure. Lower private and public spending on research is likely to have a significant impact on the capacity of countries to attract and retain talents in the longer term. With no pretence to trace a direct causality link, Figures 2 and 3 (below) illustrate the strong correlation between highly-skilled migration flows and R&D expenditure (both public and private).

Note: Emigration rates are constructed as the ratio of high-education emigrants over the number of people within their origin country with similar educational characteristics (taken from Barro and Lee, 2013).

Source: OECD, own calculations

What the charts illustrate is that low spending on R&D is correlated both with a weaker pull factor (capacity to attract talents) and a stronger push factor (retaining talents). Survey evidence [1] on the mobility determinants of researchers somewhat points in a similar direction: career progression, research funding, facilities, and equipment (all of which are likely to be highly associated with R&D spending) appear among the top reasons for moving both to another EU country and outside the EU.

A country that gives a high priority to R&D is one that is likely to generate growth in innovative sectors over the medium to long term (see Veugelers, 2014). This is true for both the public sector (within universities’ fields of research) and the private sector (in innovative business sectors). In turn, an economy where growth originates from innovative sectors is well placed to attract talents from abroad or create jobs for the highly-qualified individuals it has trained.  As such, one can envision that countries in the EU periphery where R&D spending has been slashed will see a higher incidence of brain drain in the years to come. Veugelers (2014) suggests these to be Ireland, Spain, Italy, and Greece.

Interestingly, Veugelers (2014) shows how also the UK saw its R&I spending slashed over the period 2007-2012. This, coupled with the potential for tougher migration laws, could harm the country’s position as a leading brain gainer in Europe going forward.

The impact of R&D on innovation, migration patterns, research facilities, and high-skilled wages is likely to manifest only over long periods of time. As such, our analysis traces the likely scenario for these European countries only in the case in which the cuts to R&D spending are not reversed: something that would be advisable, as fiscal space materialises.

Research assistance by Alvaro Leandro is gratefully acknowledged.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read article More on this topic

Blog Post

Climate migration: what do we really know?

While uncertain, studies suggest that climate change will cause significant internal and international migration over the next century.

By: Klaas Lenaerts and Simone Tagliapietra Topic: Global economy and trade Date: April 25, 2022
Read article More by this author

Blog Post

European governance

Bold European Union action is needed to support Ukrainian refugees

Hosting Ukrainian refugees could cost European Union countries in excess of €40 billion this year. A dedicated EU fund is needed to manage the fiscal burden.

By: Zsolt Darvas Topic: European governance, Global economy and trade Date: April 6, 2022
Read article Download PDF More on this topic

Policy Contribution

Inclusive growth

Better pensions for the European Union’s self-employed

What is the current state of pensions policy in Europe and how are independent workers treated compared with their traditionally employed counterparts?

By: Rebecca Christie, Monika Grzegorczyk and Diane Mulcahy Topic: Inclusive growth Date: March 24, 2022
Read article More on this topic More by this author

Blog Post

The economic policy consequences of the war

The Ukraine war will have significant economic policy consequences for the European Union and its members, arising from the adverse supply shock triggered by the rise in oil and gas prices, energy independence measures, the inflow of refugees and boosted defence spending. Their direct budgetary implications could be 1.1/4% of GDP in 2022.

By: Jean Pisani-Ferry Topic: Global economy and trade Date: March 8, 2022
Read article More by this author


European governance

The euro comes of age

A well-functioning euro reflects a degree of unity that allows the EU to credibly claim a position at the global table and therefore help shape the policies that will deal with global problems. That is a decisive success.

By: Maria Demertzis Topic: European governance, Macroeconomic policy Date: January 13, 2022
Read about event More on this topic

Past Event

Past Event

Inside the European crises: a conversation with Marco Buti

At this event Marco Buti talks to Maria Demertzis, André Sapir and Guntram Wolff about his new book, in which he gives an insiders look at European policy making.

Speakers: Marco Buti, Maria Demertzis, André Sapir and Guntram B. Wolff Topic: European governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 3, 2021
Read article Download PDF More on this topic More by this author

External Publication

Chinese economic statecraft: what to expect in the next five years?

Chapter from 'Storms Ahead: the Future Geoeconomic world order' on the expectations from the next five years of Chinese economic policy, published on 27 October 2021.

By: Alicia García-Herrero Topic: Global economy and trade Date: November 26, 2021
Read article

Blog Post

European governanceInclusive growth

The socioeconomic effects of COVID-19 on women

The pandemic has disproportionately affected women both professionally and at home. Although the gender gap in labour force participation since the onset of the pandemic hasn't worsened, policy still needs to tackle existing gender gaps, which for some EU countries are very substantive.

By: Maria Demertzis and Mia Hoffmann Topic: European governance, Inclusive growth Date: November 3, 2021
Read article Download PDF

Parliamentary Testimony

European ParliamentInclusive growth

Understanding the socioeconomic effects of the COVID-19 pandemic on women

Testimony before the European Parliament's Committee on Economic and Monetary Affairs (ECON) on the consequences of the pandemic on women.

By: Maria Demertzis and Mia Hoffmann Topic: European Parliament, Inclusive growth, Macroeconomic policy Date: October 27, 2021
Read article More by this author

Blog Post

Inclusive growth

Making antitrust work for, not against, gig workers and the self-employed

Policymakers should act to deal with labour-market concentration trends that potentially harm workers, especially gig workers and the self-employed.

By: Georgios Petropoulos Topic: Digital economy and innovation, Inclusive growth Date: October 11, 2021
Read article More on this topic

External Publication

Winners and losers of energy and climate policy – How can the costs be redistributed?

Who should bear more and who less of the burden achieving climate policy goals?

By: Gustav Fredriksson and Georg Zachmann Topic: Green economy Date: September 24, 2021
Read about event More on this topic

Past Event

Past Event

How to strike the right balance between the three pillars of the pension system?

In this event panelists will discuss the future of European pension schemes.

Speakers: Elsa Fornero, Svend E. Hougaard Jensen and Suvi-Anne Siimes Topic: Macroeconomic policy Date: September 23, 2021
Load more posts