Talents’ Migration and the Financing of Higher Education, Paradigms and Paradoxes
By Marcel Gerard, Catholic University of Louvain and CESifo
Until recently, talented people born in one country were educated, worked, retired and died in that same country. For that country, financing higher education, through tuition fees paid by families, foundations or financial institutions providing loans, or through taxes, was an investment generating extra welfare for the local population: larger graduate income meant extra tax revenues, better wealth, improved productivity of both high and low skilled people. These positive externalities justified and even guided an efficient and fair sharing of the cost of studies between tuition fees and tax financed subsidies. That was the old paradigm.
Nowadays the story is different. Talented students are international. Cross border spillovers are at work: the country which hosts them for higher education is neither their place of birth and first education, nor of work after graduation. And the jurisdiction which finances the studies is no longer that which benefits from the enrichment of that human capital. Even more, studying abroad is a driver for subsequently working abroad.