Abstract

There is a growing amount of literature investigating the wage effects of regional human capital. Up to now research concentrates on spillover effects generated by the regional stock of skilled workers (human capital externalities). We put a special focus on wage effects caused by the interregional in-migration (brain gain) and out-migration (brain drain) of skilled workers. We argue that the effects of incoming and outgoing migration streams might be asymmetric. On the one hand, an incoming migrant could increase the local diversity pool and therefore generate particularly large spillover effects. On the other hand, knowledge exchange is based on social networks. Assuming that incoming workers find comparable small networks at the beginning and outgoing workers leave comparable large networks, effects induced by brain gain might be smaller than effects generated by brain drain. The relative size is an empirical matter. We test these theoretical considerations with a large administrative German panel data set.