Capital Accumulation through Studying Abroad and Return Migration


This paper characterizes the interactions among studying abroad, return migration, and capital accumulation, in a two-country overlapping generations model with households of heterogeneous ability. The model exhibits positive selection of migration status (i.e., permanent, return, and non-migrants) based on ability, and over time, return migration increases as capital accumulates. Further, a decrease in the fixed cost of studying abroad and a simultaneous offsetting increase in the fixed cost of working abroad raise the relative supply of capital in the source country without decreasing anyone’s utility. Nevertheless, any single change in either fixed cost cannot achieve it.


Capital accumulation, Studying abroad, Return migration, Heterogeneous ability, Positive selection, Brain gain

JEL Classification

F22, I25, O15


Laixun ZHAO
Research Institute for Economics and Business Administration,
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059

Takumi NAITO
Waseda University