Are "nativists" wrong about brain drain?

Just because high-skilled migration is “voluntary and mutually beneficial” doesn’t mean it makes everyone better off.

Written by Noah Carl.

In a recent article, Alex Nowrasteh of the Cato Institute argues that brain drain is a “bad argument for closed borders”. Since he quotes me twice, I thought I’d pen a response.

Regular readers will know that I already responded to Noah Smith’s article on brain drain. Nowrasteh must have missed my response, since his article raises many of the same points as Smith’s and doesn’t address the counterarguments I put forward. At this point, I could just say, “go read my response to Smith”. But I think a direct rebuttal to Nowrasteh is warranted.

Before getting to Nowrasteh’s substantive claims, there’s one tangential point that needs addressing. Nowrasteh asserts without evidence that “nativists” who complain about brain drain are engaged in “concern trolling” – that they’re merely pretending to care about the well-being of people in other countries. They do this, he speculates, in order to rehabilitate their “mean, misanthropic reputation”.

While Nowrasteh may be correct that some “nativists” are merely pretending to care about the well-being of people in other countries, he presents no evidence that this is true of any specific person. And even if he did, such evidence would be irrelevant to the question of whether brain drain has the deleterious effects that some “nativists” claim it has. Hence Nowrasteh’s accusation mainly serves as a rhetorical device to cast his opponents in a negative light.

Interestingly, Nowrasteh claims that what “nativists” are trying to do is show that “restrictions are actually good for the immigrants and the countries they come from”. I can’t speak for others in my camp, but I’ve never claimed that restrictions are good “for the immigrants”. In fact, in the very article of mine Nowrasteh quotes, I said of low-skilled migrants that “by permitting their entry you’re making them better off”. And the same is obviously true of high-skilled migrants. My claim is that high-skilled emigration is bad for the people left behind.

Nowrasteh begins his article with a thought experiment about a skilled worker who has a productivity-limiting disability. He writes:

Nobody would say the disabled person described should remain handicapped because doing so increases the average productivity of other people with his condition. However, nativists who use the “brain drain” argument for closed borders argue that the injured person should not seek to cure himself because it would diminish the average productivity of other disabled people.

I’m afraid this is a complete straw man of the brain drain argument – or at least the version of it that I would defend. Nowrasteh seems to believe the only negative impact brain drain has on the sending country is purely compositional: people of above-average productivity leave, so average productivity goes down, but no individual in the sending country is worse off than he was before.

Needless to say, if this were the only negative impact of brain drain, the case against high-skilled emigration from poor countries would be extremely weak. But it isn’t the only negative impact – far from it. Even Noah Smith accepts there may be other “potential costs”, including “less entrepreneurship” and “degradation in the quality of government”.

As a libertarian, Nowrasteh has a strong presumption in favour of liberty. High-skilled emigration must be good, he reasons, since it is “voluntary and mutually beneficial” (both the migrants and the receiving country benefit). What he’s missing is that high-skilled people have positive externalities on those around them, so when they leave their home countries the people left behind are worse off.

I explained this point at length in my response to Smith, noting that people with high IQ are needed “to start companies, to design infrastructure, to administer government – to do all the things that are necessary for economic development”. But perhaps Nowrasteh would rather hear it from a fellow economist? In which case I’d point him to the work of Garett Jones.

As an aside, I’m not saying that Jones holds any particular view on high-skilled immigration (from what I can tell, he’s in favour of it).¹ I’m only citing his work to back my claim that people with high IQ confer positive externalities on others.

In a 2010 paper titled ‘IQ in the Production Function’, Jones and his colleague Joel Schneider identified a puzzle. The effect of IQ on productivity at the individual level (as measured by wages) appears to be much smaller than the effect of IQ on productivity at the national level (as measured by GDP per worker). In other words, countries with high average IQs are much more productive than you’d expect based on the individual-level relationship between IQ and productivity.²

In his 2015 book Hive Mind, Jones sketched out a solution to the puzzle: high intelligence has positive spillovers. People with high IQ are more patient, more cooperative, more useful when there are skill complementarities, and more likely to support market-oriented policies. He provides ample evidence for each of these proposed channels in the various chapters of the book.

Jones is by no means the first person to talk about the positive externalities conferred by people with high IQ – though he deserves credit for formalising the idea and for outlining precise mechanisms. Back in 1980, Arthur Jensen observed that “the social implications of exceptionally high ability” are “considerably greater than the personal implications”. And in the Descent of Man, Charles Darwin wrote the following:

It is very difficult to say why one civilised nation rises, becomes more powerful, and spreads more widely, than another; or why the same nation progresses more quickly at one time than at another. We can only say that it depends on an increase in the actual number of the population, on the number of the men endowed with high intellectual and moral faculties, as well as on their standard of excellence.

What this means is that just because high-skilled migration is “voluntary and mutually beneficial” doesn’t mean it makes everyone better off. When you remove a positive externality, you make those who were benefiting from that externality worse off. Which is why high-skilled emigration is bad for the people left behind in the sending country.

Nowrasteh might argue that the loss of people with high IQ is more than outweighed by remittances, gains from trade and technology transfers, but as noted in my response to Smith, this just isn’t plausible:

While things like remittances, gains from trade and technology transfers are certainly beneficial, there’s no evidence that they’re important predictors of economic development. By contrast, human capital (measured properly) is consistently among the most important predictors.

Take the extreme case. Suppose every single person with a university degree in one of the poorest African countries just picked up and left. Then suppose they resettled in the West and never came back. Does Nowrasteh really doubt that the people left behind would be worse off?

Toward the end of his article, Nowrasteh grapples with the argument that high-skilled emigration must be bad for sending countries because why else would the West be encouraging skilled workers to leave Russia?

Here he admits there’s a “potential cost”. In fact, he goes as far as saying it’s “true” that high-skilled emigration “would deprive firms of human capital”. He also states that during wartime, “the negative effects of the brain drain on the sending country dominate”. All of which contradicts his earlier claim that brain drain’s only negative effect is compositional. (His ultimate answer to this very inconvenient argument is suggesting that things like remittances “counteract” the negative effects of brain drain.)

Nowrasteh is entirely correct that high-skilled migration is both good for the immigrants and good for the receiving countries (at least in a purely economic sense). However, he’s simply wrong that it’s good for the sending countries.

Whether this leads you to oppose admitting skilled migrants from the world’s poorest countries depends on your values. If you value the economic benefits to receiving countries and the migrants’ freedom more than the material well-being of their countrymen, you’d presumably still want to admit them. But let’s be clear: not everyone benefits.

Noah Carl is an Editor at Aporia Magazine.

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1. On the other hand, Jones has written that “raising a nation’s average level of mental skills should be a top priority”, which seems difficult to reconcile with support for high-skilled emigration from poor countries.

2. One can quibble with Jones’s estimates, but he’s surely right that a “paradox of IQ” exists.