There is little doubt that the long-run growth perspectives of industrialized countries crucially depend on their ability to continuously develop new and better products and to improve production processes. This capacity is shaped in turn by the quality of the educated work force. Human resource recruiters have long understood this. Business consultants talk about a “war of talent” (Chambers et al. 1998). Awareness is growing that a successful position in the “global competition for talent” (OECD 2009 ) is important.

The increasing mobility of highly educated workers puts strains on the workings of higher education systems, in particular if they...

As more and more countries convert into knowledge-based economies, the competition for scientific talent has become fiercer. The United States has traditionally been very successful at attracting foreign students and researchers. Moreover there are indications that the United States attracts the best and brightest among them, a phenomenon that has been coined the “elite brain drain” (Hunter et al. 2009; Maier et al.2007; Laudel 2005; Stephan 2012). Furthermore, with high stay rates upon graduation, these foreign talents continue to contribute substantially to the US science and innovation system.

In many sending countries the elite brain drain to the United States...

Research mobility, and particularly international mobility, has been encouraged at the policy level to gain enriching experiences, build networks and facilitate knowledge and technology transfer, thereby increasing productivity. The European Commission has proposed a significant number of measures to increase the mobility of researchers across the European Research Area (ERA) and to help European researchers develop their careers (EC 2001, 2006, 2010a, b). Improving the working conditions, facilitating mobility, and guaranteeing an open recruitment of researchers have been identified as the main challenges that hinder the realization of an open and competitive European single labor market for researchers (EC 2012a)....

Human capital formation and utilization—stated more concretely, though less comprehensively, education and work—are affected, in a multitude of ways, by economic conditions and by economic policies. Labor market conditions—notably, the “education premium” of higher earnings (and lower risk of unemployment) enjoyed by those with more education—directly affect the incentives for investment in human capital. Direct and indirect public expenditures and tax policies in support of educational institutions, individual students and their families, and workplace-related training and skill developments exemplify the types of policies that can affect the demand for and cost of investment in human capital....

Globalization and student and graduate mobility have important consequences for fiscal policy. The capacity to generate public revenue becomes more limited, though the need for public expenditure continues to rise (in particular, see chapter 5 by Wildasin in this volume). In this chapter we examine the consequences of international mobility of students and graduates for one specific aspect of fiscal policy, the financing of higher education.

The point of view we adopt might be regarded as typically European. The European features we highlight, however, amply support a more general argument. The main features are the following: First, it is widely...

The Lisbon objectives establish the aim of inclusive economic growth in Europe against a backdrop of competition from fast-growing countries in other parts of the world, notably Asia and Latin America. The issues of global competition long predate the economic crisis.

This chapter addresses a core element of Lisbon—fostering the development of human capital. The opening section discusses the objectives of higher education, including why human capital matters. Section 7.2 establishes the importance of mobility (i.e., the Why). Section 7.3, which constitutes the major part of the chapter, discusses mechanisms to foster mobility (i.e., the How). Section 7.4 looks...

Higher education is often highly subsidized, particularly in Western European countries. However, when students are mobile, there are frequent imbalances and requests for compensation by net importers of students. Gérard (2012) explores two alternative solutions to this problem: student vouchers and interjurisdictional transfers. In a slightly different framework, where countries can decide to subsidize internationally applicable or country-specific human capital, Poutvaara (2008) discusses the benefits of suitably differentiated tuition fees, graduate taxes and income-contingent loans.

Around the world there is a growing trend toward increasing students’ contributions to the cost of higher education. One of the advantages is that when...

Immigration is a topic that receives wide public attention. To date, much of the economic research literature has focused on the consequences of increasing the supply of immigrants on the labor market for natives, namely wages, employment, and earnings inequality. Much less attention has been paid to other forms of immigration, including high-skilled and nonlabor immigrants such as university students. This is surprising given the globalized nature of higher education (HE) today and the rapid rise in the number of international students. This chapter focuses on a HE system in which there has been a rapid and sizable influx of...

Advancing production technologies and the growing complexity of service industries will demand an increasingly larger share of highly qualified workers in the future labor force. At the same time, the aging of workforce will not only depress overall labor supply but also put strains on public finances, as old-age related spending is expected to grow at a higher rate than tax revenues and social security contributions (see also the discussion by Wildasin in chapter 5 of this volume). From the perspective of a developed country, this situation could be at least partly solved by promoting immigration of skilled workers or...

Localized knowledge spillovers (LKS), as crucial determinant of the innovative performance of the local economy, are often considered responsible for structural differences in the likelihood of innovation among different geographical areas. The geographically bounded nature of such knowledge spillovers allows justifying why innovation is not evenly diffused across space and why this is often difficult to reverse.

Building on this reasoning and taking into account the relevant policy implications of this statement an increasing research effort has been devoted to identify the mechanisms under the diffusion of (tacit) knowledge, generally associated to valuable localized spillovers and considered as fundamental engine...