PUB - Publikationen an der Universität Bielefeld

This dissertation expands the discussion about the brain gain theory in two ways (according to the brain gain theory a higher skilled migration rate may lead to a rise in human capital accumulation of the domestic country because agents have ex-ante a larger incentive to invest in education in order to be eligible to migrate). First, we introduce occupational choice in a brain drain setting letting agents be able to become (risk-bearing) entrepreneurs in the domestic country. In this way we want to test whether the brain gain theory holds for the case where a higher (skilled) migration probability leads to a lower entrepreneurship rate. A lower entrepreneurship rate, on the other hand, may erode economic development according to earlier studies. Second, we include the possibility of agents to invest in physical capital in a brain drain setting. If economic individuals are subject to (relaxed) borrowing constraints with respect to consumption, we test whether they have still an incentive to invest more in education when the brain drain rate rises (as the brain gain theory predicts). We manage to expand the tax evasion theory in two respects as well. First, we suggest that the existence of a shadow economy sector (evading taxation) can be put down to the risk (in terms of ex-ante unknown abilities) which (skilled) agents have to bear with respect to their earnings in the formal sector. In this setting we examine how sensitive are the share of the informal sector, the growth rate and the social welfare of the economy to changes in the risk measure and changes in the usually quoted policy measures (the tax rate, the penalty rate, the audit rate). Second, we explain the relatively high pollution level in less developed countries with the existence of environmental tax evasion, which complements corruption. In this model we test the influence of the environmental tax rate, the penalty rate, the audit rate and the corruption costs on the level of pollution, the growth rate and the welfare of the economy.