This paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students' efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we find that brain drain has conflicting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the findings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework.

The paper tests the idea that major demographic shifts can affect housing prices. We first build an overlapping generation model and analytically solve for the equilibrium price of the asset. The model predicts that economies with a higher fraction of old people in the overall population have lower house prices. We empirically test this hypothesis using data on house prices and demographic variables from the Organization for Economic Co-operation and Development (OECD). We find that if population growth increases by one percentage point, house price growth increases by 1.4 percentage points.

Developing countries often lack an adequate social security system, and elderly parents rely heavily on their children for support. Aging populations and low-fertility rates are an emerging trend in developing countries. In this paper, we examine the effects of sibship size on individuals' internal migration decisions in China. We find that the number of siblings has a positive effect on individual migration decisions, but this effect is non-linear and marginally increasing. Second, we find that having brothers has a more significant effect on migration decisions than having sisters. Finally, although of different magnitudes, the effects are persistent across genders, Hukou status, and education levels.