Brain Drain, Educational Quality and Immigration Policy: Impact on Productive Human Capital in Source and Host Countries, with Canada as a Case Study

With the 1967 reform, Canada's immigration policy changed from a country-preference system to a points system. The latter provides points according to applicants' education level but abstracts from the quality of their education. This paper considers the points system, the country-preference system, as well as a system that includes both educational quantity and quality and is termed the "𝑞2 points system." It focuses on the policies' impact on immigrants' average productive human capital – the product of educational quality and quantity – or skill level, 𝑆𝑥 (for policy 𝑥). It shows, among others, that i) 𝑆𝑥 is greater under the 𝑞2 system than under the points system (𝑆𝑞 > 𝑆ℎ); ii) a switch from a points system to a 𝑞2 system results in a human capital gain or net brain gain for Country 1 (the high-education quality country) and a loss or net brain drain for Country 2; iii) 𝑆𝑥 is greater under the country-preference system than under the points system (𝑆𝑝 > 𝑆ℎ); iv) whether 𝑆𝑥 is greater under the 𝑞2 or the country-preference system is ambiguous, with 𝑆𝑞 >(<) 𝑆𝑝 if the quality of education in Country 1 relative to Country 2 is higher (lower) than the degree of preference for migrants from Country 1 relative to Country 2; and v) an increase in education quality in the high- (low-) quality source country has a positive (ambiguous) impact on 𝑆𝑥 under all three policies and the impact is larger under the 𝑞2 than under the points system.