0948667

Brain drain, a curse or a blessing for development?

An empirical investigation into the source country effects of skilled emigration on life expectancy, child mortality and immunisation uptake in developing countries

BSc Economics 0948667

Word Count: 6,998

Abstract

In this paper we empirically investigate the complex relationship between the brain drain and development. Using panel data on emigration rates of skilled workers from 91 developing countries, we test the relationship between high skilled emigration and source country development, as proxied for by three measures; life expectancy, child mortality and immunisation uptake. We investigate the relationship using both the brain drain and the medical brain drain, given the specific development and health related nature of our paper. Pooled OLS, random effects and fixed effects estimation methods are employed. We find the medical brain drain exhibits no significant relationship with life expectancy however may negatively affect immunisation against measles and child mortality rates if it significantly reduces staffing levels of physicians. The brain drain is estimated to have a positive and significant effect on life expectancy and immunisation, however no significant effect is found with respect to child mortality. Our research further contributes to the increasing literature surrounding the brain gain.

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Contents

Chapter 1
1.1

Introduction
Trends in International Skilled Migration

4
4

Chapter 2
2.1 2.2 2.3 2.3.1 2.3.2 2.3.3 2.4

Literature Review
The Brain Drain The Brain Gain Feedback Effects Return Migration Remittances by the Highly Skilled Technology, Transfer and Trade The Medical Brain Drain and Development

5
5 6 7 7 8 8 8

Chapter 3

The Gap in the Literature

Chapter 4

Data

Chapter 5
5.1.1 5.1.2 5.2.1 5.2.2 5.3.1

Empirical Models
Life Expectancy Model Specification Mortality, Under-5 and Infant Model Specification Immunisation against Measles and DPT

9
9 10 11 13 13

Chapter 6 Chapter 7
7.1 7.2 7.2.1 7.2.2

Econometric Methods Estimation Results

Life Expectancy Mortality Mortality, Under-5 Mortality, Infant

14 15
15 16 16 17
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7.3 7.3.1

Immunisation Immunisation, Measles

18 18

7.3.2 7.4

Immunisation, DPT The Brain Drain and Development, a Non-linear Relationship?

19 19

Chapter 8
8.1 8.2 8.3 8.4

Econometric Issues
Simultaneous Causality Measurement Error Omitted Variable Bias Serial Correlation

20
21 21 21 22

Chapter 9

Conclusion

22

Chapter 10

References

24

Chapter 11

Appendices

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Introduction

The brain drain has become an increasingly debated area of economic research and has significant implications for international migration policies. The brain drain is the migration of engineers, physicians, scientists, and other very highly skilled professionals with university training. (Docquier and Rapoport, 2006). Whilst drain implies a loss to sending countries, no consensus has yet emerged in the literature. Globalisation has facilitated the movement of skilled migrants from developing to developed economies. Whilst we have seen a reduction in average income inequality, much of this has come from the rapid industrialisation of China and India, who have averaged 9.1% and 6.1% GDP growth respectively over the last decade (Winters and Yusuf, 2007). Unfortunately this has not been evident across the majority of developing countries; a divide still exists and will continue to do so unless successful development policies are formulated (Todaro and Smith, 2009). We believe it is important to consider the extent to which the brain drain constrains development. If it does, there is an impetus to limit it. In this paper we estimate the effect of the brain drain on life expectancy, mortality rates and immunisation uptake, with the aim of providing some scope towards policy directives.

For the rest of this chapter we summarise the trends in skilled migration. Chapter 2 reviews the outstanding literature and synthesises the skilled migration-development nexus. Chapter 3 describes the gap in the literature. We believe it is important to assess the relationship between the brain drain and development outside of pure economic measures. Chapter 4 describes the data. Chapters 5 and 6 explain our econometric methods and justify our model selection. Chapter 7 discusses the limitations of our analysis with respect to a range of important econometric issues. Chapter 8 reports our findings and discusses their weight in terms of policy application. We find the brain drain exhibits a positive effect on life expectancy and immunisation. The medical brain drain does not significantly affect development, however given physicians appears a significant determinant of mortality and measles immunisation; if the MBD reduces staffing levels then we may see a negative effect on development. Chapter 9 draws some conclusions. We argue in favour of skilled emigration; however the optimal rate is unclear and undoubtedly country-specific.

1.1

Trends in skilled migration

In pursuit of growth, many developed economies have employed increasingly selective immigration policies, with the aim of attracting the most talented migrants. During the 1990s skilled emigration sharply increased as developed economies increased their admissions of skilled workers. A demand pull on behalf

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of receiving countries now characterises the flow of skilled migration (Beine, Docquier and Rapoport, 2003).

Analysing data on migration to 6 OECD countries, Deefort (2008) reports a fourfold increase in the proportion of migrants with tertiary education between 1975 and 2000. However, whilst the brain drain may be increasing in absolute size, it has remained relatively stable over the last 50 years and will likely fall due to increased educational investments in developing countries and the stable intake of developed countries immigration policies (Gibson and McKenzie, 2011).

Literature review, the skilled migration-development nexus

2.1

Brain drain

Early neoclassical models proposed by Grubel and Scott (1966) and Johnson (1967) argue that if emigration of skilled workers is small and only their own marginal product is removed, those remaining would not be adversely affected. These models rely on perfect competition, perfect price flexibility and perfect information. Furthermore, given those emigrating are rational agents in pursuit of higher returns, global incomes and welfare increase. These models assume any negative externalities are small and are compensated for by the assets emigrants leave behind (Berry and Soligo, 1969). With perfect markets, factor returns are equalised across trading nations, remaining residents thus gain from higher land-labour and capital-labour ratios (Docquier 2007). The brain drain was seen as an optimal process of factor reallocation, and a prerequisite for development.

However Bhagwati (1976) pointed out the existence of negative consequences from the brain drain when human capital externalities were considered. If the social marginal product of skilled emigrants exceed their own marginal product then there will be a deadweight loss when these workers emigrate. Stark (2004) explains how individuals who decide how much to invest in their own human capital rarely take positive externalities into consideration and consequently form a level of human capital less than the social optimum. However the brain drain makes this already unfortunate outcome worst, depriving developing countries of valuable skilled capital, resulting in a position further from social optimum. Bhagwati and Hamada (1973) claim a fiscal externality, since the initial government investment into the emigrants education is not recovered and future tax revenues foregone are costly, both are likely to have been relatively high for skilled workers.
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During the 1980s endogenous growth theories arose and stressed the importance of positive human capital externalities in the growth-development framework (Barro and Lee, 1993). Reformulating the brain drain into this endogenous growth framework further strengthened the belief that the brain drain would have dire consequences for the welfare of those remaining. Externalities involving the flow of knowledge from skilled to unskilled labour during production raise the productivity of unskilled labour. However a brain drain would lessen these skill augmenting effects and lower productivity of remaining unskilled workers, ultimately raising income inequalities and adversely affecting development (Docquier, 2007). Finally, Corts (2007) emphasises the potential harmful effects skilled migration can impose on children left behind. They find the exodus of parents and the replacement care provided, generates severe negative social development consequences for children, measured by academic performance and psychological well being. Consequently, any degree of skilled migration could adversely affect development indicators, particularly life expectancy and mortality.

2.2

Brain gain

A third generation of thought has now emerged, proposing a brain gain. Stark, Helmenstein and Prskawetz (1997) demonstrated in their hypothetical situation comparing a closed economy to one which permitted emigration, that the possibility of a higher return to human capital abroad generates an incentive for increased educational investments, and ultimately a possibility of a higher average level of human capital, given some agents failed to eventually emigrate and those who stayed would be of higher skill than what they would have been. Mountford (1997) proposed an optimal brain drain; where at some rate the ex-ante increase would exceed the ex-post human capital stock decrease, thus inducing a net increase of human capital. According to the new growth literature, human capital gains are fundamental to development, supporting the role of skilled emigration in development. Additionally, if the prospect of skilled migration increases female employment opportunities, raising the cost of pregnancy, we may see greater female tertiary enrolment and consequently lower fertility and child mortality rates, a significant impetus towards development.

Beine, Docquier and Rapoport (2003) build on the earlier work of Beine et al. (2001) and use a more reliable data set recording brain drain rates by educational levels in 1990 (Carrington and Detraigiache, 1998). They find a significant and positive relationship between the brain drain and human capital formation. They distinguish between winners for which the brain drain has a positive effect on growth and losers, for which it is negative. They find the number of losers in their sample exceed winners, however the population
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of the latter group account for nearly 80% of the sample. They find countries combining a brain drain rate of less than 20% and/or the proportion of skilled workers amongst the population is less than 5%, experience a gain. Furthermore the notion of winners and losers supports the need for a better understanding of country specific factors affecting the brain drains effect.

However the limitations of such cross sectional analysis involve the possibility of omitted variable bias. Making use of a panel data set recording brain drain rates by educational attainment between 1975-2000, Beine, Defoort and Docquier (2011) found an inverted U-shaped relationship between skilled emigration and human capital formation, the effect being positive when the brain drain does not exceed 20-30%, depending on country specific settings and given most do not experience such high rates this would support the case for a development gain.

2.3

Feedback effects

Much of the literature has failed to consider feedback effects, with which the brain drain may produce a net gain to the source country. These include; remittances, FDI, technology/knowledge transfers and return migration. Through these links, the brain drain may provide the much needed development stimulus, and consequently may exhibit a positive relationship with development indicators.

2.3.1

Return migration

Mountford (1997) recognises the benefit a returnee migrant may provide if they are able to raise average productivity, particularly so when the migrant has gained experience and valuable skills from a more advanced economy. Johnson and Regets (1998) posit a brain circulation, where rates of return amongst highly skilled are high enough to produce a gain. In their research on U.S. immigrant science and technology students, they found roughly 50% of their sample intended to return to their origin country. This was confirmed in their survey 5 years later, although this varied significantly across different nationalities. However large discrepancies in rates of return make it hard to generalise the benefit of return migration across countries. Research has also proposed returnees are the most able of the emigrant population because high income inequality at the origin causes the expected return of the skilled emigrants to be the highest. Such an outcome would mitigate the initial drain and could pose a dynamic development gain to the source country.

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2.3.2

Remittances by the highly skilled

Remittances may be able to alleviate liquidity constraints in consumption of goods and services, such as healthcare and promote productive investments. Consequently we may see improvements in measures such as life expectancy, mortality and vaccination uptake via this channel.

However critics argue remittances are wasted through unproductive consumption and imports. Nevertheless Taylor and Adleman (1995) advocate significant multiplier effects given local production must provide at least some of these goods, raising money supply, and stimulating production and employment. Although remittances could raise inequality and accentuate poverty given the most skilled emigrants are likely to have come from well off backgrounds in urban areas. However this inequality effect may depend on migration selectivity. The brain drain may eventually lower inequality as networks are established abroad and the costs/risks of migration fall, less skilled enjoy the possibility of migration and the negative effect of remittances on inequality could taper off (Docquier and Rapoport, 2005).

2.3.3

Technology, knowledge transfer and trade

Despite Bhagwattis pessimism, he recognised the ability of technological transfers from skilled emigrants to those remaining in the source country to have significant positive economic effects. Transfers are facilitated if migrants maintain strong connections with source countries. Globalisation, reductions in air travel and the internet has strengthened this channel. Kugler and Rapoport (2007) find a positive relationship between FDI to the source country from the U.S. and the number of skilled emigrants that country has in the U.S. However this unrepresentative sample consists of larger countries that are least likely to be adversely affected by the brain drain. Gibson and McKenzie (2010) find the opposite, high skilled migrants were unlikely to be involved in trade with their source country and any gain is unlikely to be significant enough to have any real development impetus. They find the majority of knowledge flowing home to developing countries tends to be news of opportunities for emigration abroad, not conducive to productivity gains. Nevertheless, diaspora networks could facilitate the flow of medical knowledge and technology conducive to better healthcare and greater life expectancy, lower mortality and increased vaccination uptake.

2.4

The medical brain drain and development

Bhargava, Docquier and Moullan (2011) assessed the extent to which physician emigration explained child mortality and vaccination rates. They also investigated the incentive mechanism. They concluded the MBD
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reduced the number of physicians at the origin, and so reducing the MBD would lower mortality rates and increase vaccinations (once literacy rates exceed 60%). However these effects were likely to be marginal, suggesting the MBD does not significantly constraint development.

The gap in the literature

Bhargava, Docquier and Moullan (2011) fail to consider the effect of the brain drain on development and focus only on the MBD. It is not unreasonable to foresee a relationship between the brain drain and development via the channels discussed. If the brain drain alters incentives in such a way to raise the human capital along with feedback effects, it could raise growth, raising the tax base with which governments could contribute towards improving healthcare, and so life expectancy may increase and mortality fall. We aim to bridge this gap. Development entails more than just income per se, and incorporates a broader cultural, social and political framework, as opposed to much of the prevailing literature which focuses on pure economic effects.

Data

With reference to table 1, a panel data set was formulated incorporating relevant variables. Much of the data regarding the development indicators was obtained via the World Bank, however skilled emigration, physician emigration and human capital data was obtained from Defoort (2006), Bhargava and Docquier (2010) and Barro and Lee (2010) respectively. The data set covered 91 developing countries as classified by the World Banks definition of low, low-middle income countries, at 3 time points, between 1995 and 2005 with 5 year intervals.

Empirical models

5.1.1

Life expectancy

We hypothesise if skilled emigration can induce positive feedback effects such as remittances and human capital incentives then life expectancy may improve. Consequently, we believe that if these channels do
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exist, and they work through the brain drain, when we control for them in our regressions, the significance on the brain drain should diminish.

Figure 1 displays a simple bivariate regression of life expectancy on the 5 year lag of the brain drain. The brain drain is estimated with a significant positive coefficient of 7.91. Similarly from figure 2, the five year lag of the MBD exhibits an insignificant negative coefficient of -6.31. This suggests a possible development gain from the brain drain, whilst there does not appear to be one from the MBD.

We augment the life expectancy model specified by Chen and Ching (2000) by incorporating skilled emigration.

Our final model,

Equation (i)

Where,

= 1,2,...,

and = 1995, 2000, 2005.

= 91 developing countries

= Country fixed effect

= Error term

5.1.2

Model specification

We include

because wealth enables individuals to purchase healthcare services, achieve a

healthier diet, obtain greater leisure, and generate a larger tax base with which government is able fund healthcare.
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Physicians per 1000,

is controlled for since we would expect a positive relationship

between the number of doctors per 1000 and life expectancy given healthcare would become more accessible. Fertility rate, is included given higher population growth could create shortages in scarce

natural resources thus lowering development and having adverse consequence for life expectancy. Remittances, would also alleviate credit constraints and facilitate access to

healthcare services. We include the 5 year lag as it would take time for additional wealth to improve life expectancy. is included given the serious consequences of endemic disease can create binding development constraints. Access to improved sanitation, is included to control for the environment. The quality

of sanitation in a country will influence the general level of health of its residents and thus life expectancy. Sub Saharan African dummy, is included for countries within this region typically exhibit lower

life expectancies. Year dummies are included to test for time effects. Our variables of interest, the brain drain, and the medical brain drain, are included to

test for the existence of any relationship between the brain drain and development outside of the channels we control for in our regressions. In the life expectancy regression we control for remittances, human capital and GDP channels. Interactions between GDP and the brain drain/MBD, and respectively,

are included to test for any non-linearities between the brain drain and development. For example we may expect feedback channels to only become significant once GDP has exceeded some level (Haas, 2008).

Note: For all regressions we include the 5 year lag of BD and MBD given it would take time for any feedback effects generated to influence development indicators. Whilst we understand the effect may take longer, we lack sufficient observations.

5.2.1

Mortality, under-5 and infant

In order to assess the effect of the brain drain on infant mortality we build on the earlier works of Bhargava, Docquier and Moullan (2011). However we include both the brain drain and MBD. One could foresee some negative mortality effect if the quality of care for newborns was lower following the parents migration (Corts, 2007). Unfortunately, due to limited data we were unable to include literacy rates in our panel
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regressions. This may be problematic given Bhargava et al. (2011) found the interaction between literacy and physicians significant in explaining mortality rates.

Figures 3-6 display scatter graphs and linear regressions for both measures of mortality. Bivariate regression of under-five mortality on the brain drain generates a significant negative coefficient of -1.06. Conversely we see a positive, yet insignificant coefficient of 0.41 on the MBD. The effect of the brain drain on infant mortality is less pronounced, given a slightly lower significant negative coefficient of -0.91. Whilst the positive coefficient on MBD is equal to 0.31 and insignificant. It appears the MBD exhibits no significant effect on mortality, however the brain drains effect appears to be negative and significant, more so on under-five mortality rates. This is probably because channels take time to function and younger children are more likely to receive the benefits from the brain drain than are newborn infants.

Our final model,

Equation (ii)

Where,

= 1,2,...,

and = 1995, 2000, 2005

= 91 developing countries

= Country fixed effect

= Error term

Note: All variables are expressed as their natural logarithm. We do so because the residuals of explanatory variables increase with the dependant variable. By log transformation we compress residuals for larger values and obtain a better fit.

In order to avoid discontinuity at zero we specify both BD and MBD as the 5 year lag of their natural log plus one.
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5.2.2

Model specification

Fertility is included given a lower spacing between births is strongly related to increased mortality. GDP determines the amount of money available to fund healthcare and influences the health of mothers and children. Physician numbers influence the quality and availability of healthcare services, which will affect child mortality. Remittances may alleviate credit constraints and facilitate access to improved health care services, but this takes time and so we lag. MBD and brain drain are included in order to assess the existence of any relationship between skilled emigration and mortality rates outside that of the channels controlled for. Interactions between the brain drain/ MBD and GDP are included to test the joint relationship between development and the brain drain with child mortality.

5.3.1

Immunisation against measles and DPT

The model is as specified for infant mortality. We assess the significance of the brain drain in determining vaccination rates.

Figures 7-10 display scatter graphs and linear regressions. Simple bivariate regressions reveal a positive and significant relationship between the brain drain and immunisation, with coefficients of 0.31 and 0.35 for measles and DPT respectively. Whilst the MBD and immunisation are negatively related with coefficients of -0.25 and -0.34 for measles and DPT respectively, but insignificant.

Our final model,

Equation (iii)

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Where,

= 1, 2,...,

and = 1995, 2000, 2005

= 91 developing countries

= Country fixed effect

= Error term

Note: all variables are expressed as their natural logarithm.

Econometric methods

Throughout the analysis we follow a similar general-to-specific procedure. First we identify variables we believe to be important in explaining the relevant development indicator, as specified by theory and research. We run preliminary bivariate regressions in order to confirm the existence of possible surface relationships. Next we exclude one of two variables whose paired correlation exceeds 0.70 in order to avoid multicollinearity.

A simple OLS regression of the relevant development indicator on the brain drain and associated control variables is estimated. At this stage we include year dummies and test their significance, if their coefficients are jointly insignificant we exclude both. Importantly by including year dummies we test for the existence of time effects.

Next we run the same general specification but account for random effects (RE) in the error. The assumption here is that there exists an unobserved country effect, one which varies across countries but is stationary over time and is uncorrelated with the error in all time periods. The RE estimation procedure is a bridge between OLS, which fails to consider the unobserved country effect and fixed effects (FE) which estimates entity demeaned variables, by subtracting the entity specific average from each variable, thus fully accounting for the unobserved effect, assuming it is correlated with included regressors. We then conduct a Breusch and Pagan Lagrangian multiplier (BPLM) test for RE, rejecting the null of zero individual effect variance in favour of the alternative RE model.

Finally, we estimate the same model using FE, and conduct a Hausman test, rejecting the null of favouring RE, where the covariance between regressors and the unobserved effect is zero, in favour of the alternative FE model, where the regressors are correlated with the unobserved effect. This outcome seems most
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appropriate given macro data. For example, imagine a multinational aid program only reaches certain countries, where it has different effects on development. Furthermore, the aid is likely to have boosted economic indicators as it induced spending multipliers through local communities, consequently the unobserved effect, the aid program is correlated with GDP and so FE should be employed. OLS would be suboptimal as it fails to consider the unobserved effect. We also test down and exclude variables that are insignificant at the 10% level, and when are excluded raise the adjusted R-squared value and the F-stat of joint insignificance.

Importantly, we compute the heteroskedasticity-robust standard errors for all regressions given a simple Whites test reveals non-constant error variances. The squared residuals from the general pooled OLS model are regressed on all explanatory variables. We then test whether the coefficients in the auxiliary regressions are jointly equal to zero, rejecting in favour of heteroskedasticity, when the variance is a function of the Xs. If we ignore the presence of heteroskedasticity our standard errors will be biased.

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7.1

Estimation results
Life expectancy

The OLS, RE and FE estimates for the model derived from equation (i) are displayed in figure 11. We exclude the insignificant year dummies and favour the FE model. We expect fixed effects to be favoured, because with macro data it is likely the unobserved country effect and regressors are correlated in different time periods.

Columns FEa and FEb display the general model with and without physicians, remittances, MBD and both interaction terms respectively. A joint test reveals they appear insignificant, and the variation explained increases from 58% to 69% whilst the F-stat of joint insignificance increases from 11.02 to 22.14 when excluded. Figure 12 displays the regression output table for the final estimates summarised in column FEb. The brain drain possesses a significant positive coefficient. The rest of the variables possess signs as expected and most are significant. Our results imply a 1% increase in skilled migration causes a 0.14 increase in life expectancy years (13.95 * 0.01 0.14), which is relatively small (approximately 1.6 months). Furthermore, a 1% increase in access to improved sanitation results in a 0.0016 increase in life expectancy years (approximately 0.02 months) and a 1% rise in fertility results in a 0.0196 increase, (approximately 0.24 months). Similarly, a 1% rise in HIV prevalence causes a 0.0079 decrease in life
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expectancy years (approximately 0.095 months). Interestingly the coefficient on GDP is very small, at 0.0006, and insignificant.

It is important to note the change in coefficients between FEa and FEb when insignificant variables are dropped. We believe the multicollinearity between fertility and physicians may be responsible. For example, when physicians are dropped the effect of fertility increases, this may be because its effect was previously distorted by its correlation with physicians. A simple regression of fertility on physicians generates a strong negative relationship. It is important here to express some concern for dropping supposedly insignificant variables. Whilst we do not think the variables we have dropped are causing variation in life expectancy, if they had been, then excluding them would generate an even greater problem of biased estimates, providing they are correlated with included regressors. Consequently we only exclude insignificant variables of interest i.e. the MBD or remittances and in this case, physicians. Those variables that theory tells us are important, even if estimated insignificant are left in the regression.

Our results support the growing literature stressing the benefits of the brain drain. In our regressions we controlled for GDP and remittances and so any effect the brain drain has on life expectancy via these variables has already been controlled for, thus the significance left in the brain drain suggests other channels operate. For example, the flow of knowledge and technology back to source countries or the prospect of migration, inducing a more skilled workforce, may play an important role here. These would enable natives to make more informed decisions, better look after their health, and raise life expectancy. Our results do not suggest a significant role for the MBD.

7.2

Mortality

7.2.1. Mortality rate, under-5

The OLS, RE and FE estimates for the general model specified in equation (ii) are displayed in figure 13. Year dummies are significant and included. We favour the FE model. Furthermore, following a test of joint insignificance we exclude remittances, MBD and both interaction terms as they appear insignificant, and when excluded the F-stat of joint insignificance rises from 25.46 to 48.35, FEa and FEb respectively.

Figure 14 displays the final FEb regression. The model generates an R-squared of 0.60. Brain drain and MBD do not appear significant. All other controls are estimated to have the correct sign as expected by theory, despite GDP being insignificant. The estimates imply a 1% increase in the fertility rate causes a
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0.39% increase in the under-five mortality rate. Whilst a 1% increase in physicians per 1000 results in a 0.17% decrease in the mortality rate.

Previously we explained how we excluded literacy rates due to limited observations. However we also expressed concern given Bhargava, Docquier and Moullan (2011) found literacy rates significant in determining mortality and immunisation. We now estimate model FEb once more but include both literacy and its interaction with physicians to validate the robustness of our results. However with only 34 observations in the subsample we were unable to estimate a panel regression and so we were restricted to OLS. Figure 15 displays the OLS comparison for the final regression (FEb). Columns OLS_lit and OLS_no_lit display estimations with and without literacy terms included. A test indicates the literacy terms are jointly insignificant and thus may imply we have not committed any considerable error. Furthermore, only the coefficient on physicians changes considerably, whilst many variables loose significance. This may be explained by the removal of literacy and its interaction with physicians which induces multicollinearity.

We also recognise the possibility of simultaneous causality between fertility and mortality. Where mortality rates are high, particularly infant, women may desire greater fertility to compensate. A simple bivariate regression of fertility on mortality generates a positive and significant coefficient of 0.40, supporting such concerns. We instrument for fertility with its 5 year lag. Testing reveals it is relevant, exhibiting a positive and significant coefficient of 1.03 with fertility, and 1.33 with mortality. We believe it is exogenous because it is unreasonable to assume future mortality rates are causing current fertility. The results of the IV estimation are displayed in figure 16. Interestingly, the coefficient on fertility is the only one remaining significant, whilst all coefficients appear sensitive to such IV estimation. This suggests fertility is endogenous and presents a serious problem for our inference.

7.2.2

Mortality rate, infant

The OLS, RE and FE estimates for the general model specified in equation (ii) are displayed in figure 17. Year dummies are significant and included. We arrive at our preferred FE specification, FEb, displayed in figure 18. As before, remittances, MBD, and the two interaction terms are insignificant and excluded. The results suggest a 1% increase in the fertility rate results in a 0.34% increase in infant mortality, whilst a 1% increase in physicians per 1000, results in a 0.15% decrease in mortality. The final model explains 55% of the variation.

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Figure 19 displays the OLS regressions. Both literacy terms appear insignificant in the OLS regressions, whilst the only term exhibiting great change is physicians, which may suggest literacy is not important for explaining mortality. Furthermore, we instrument for fertility with the 5 year lag. The results of the IV estimation are displayed in figure 20. Once more, fertility is the only coefficient which remains significant.

For both measures of mortality our estimates are similar. Whilst both the brain drain and the MBD are insignificant, if the MBD works to reduce the number of physicians per 1000 in the source country, then given the coefficient on physicians is significantly negative, the MBD may increase mortality. Our results are similar to Bhargava, Docquier and Moullan (2011). However they find reducing the MBD will only have a small effect on reducing mortality, perhaps because the supply of medical services in developing countries is inelastic, simply reducing the MBD may not increase the number of physicians employed, and instead those who would have emigrated are likely to face dislocation and unemployment, forcing them to transfer to a different industry where they may not skilled, having an adverse affect on productivity and potentially development. Nevertheless, we do not find any positive feedback effects operating on mortality.

7.3

Immunisation

7.3.1

Immunisation, measles

The OLS, RE and FE estimates for the general model specified in equation (iii) are displayed in figure 21. We favour the RE model. The MBD and both interaction terms are insignificant and excluded from the final regression, REb, displayed in figure 22. The model generates a low R-squared of 0.40.

Interestingly our preferred RE specification generates a positive and significant coefficient of 0.33 on the brain drain, thus a 1% increase in the brain drain rate induces a 0.33% increase in measles immunisation. Similarly, a 1% increase in the fertility rate reduces measles immunisation by 0.25% and a 1% increase in the physicians per 1000 increases immunisation rates by 0.13%.

Figure 23 displays the OLS comparison for the final REb regression when literacy terms are included and when not. The size and significance of coefficients change considerably and so it may be that literacy is important, however clearly we are limited in our analysis given the available data.

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7.3.2

Immunisation, DPT

The OLS, RE and FE estimates for the general model specified in equation (iii) are displayed in figure 24.We favour the RE model. Once more we exclude the MBD and both interaction terms from our final regression, REb, displayed in figure 25. The model explains less than half the variation. Amongst controls, only fertility is estimated significant, suggesting a 1% increase in the fertility rate reduces DPT immunisation by 0.26%. Interestingly, the brain drain is estimated significant and positive, implying a 1% rise in the brain drain rate increases immunisation by 0.31%. Finally, with reference to figure 26, whilst neither literacy terms are significant in the OLS regressions, as before, the coefficients change quite a bit, and so we believe literacy may be important, however we lack observations to investigate further.

Estimates are similar across immunisation measures. A significant positive effect from the brain drain on vaccination exists. Perhaps this is through similar channels as discussed for life expectancy. Interestingly, physicians appear positive and significant in only the measles regression. Consequently, if the MBD works to reduce staffing levels then immunisation against measles may fall, constituting a negative development effect.

7.4

The brain drain and development, a non-linear relationship?

Throughout our analysis we investigated whether the relationship between the brain drain and development depends on the countrys GDP. Haas (2008) explained how it is unlikely skilled migration can enforce sustained development and growth. Under-developed countries are plagued by underlying problems, such as unstable political environments, unfavourable economic policies, undefined property rights, corruption, disease, high fertility and limited infrastructure. Skilled migration is unlikely to solve any of these issues directly. However if governments can successfully reform economies and economic growth ensues, skilled migrants are likely to play a reinforcing effect, by investing back home. We test for such a relationship by including an interaction term between GDP and skilled emigration in our regressions. However it was always insignificant. Nevertheless, the point estimate was consistently negative, however only in our mortality regression did this comply with his propositions, so that once GDP exceeded some level, the brain drain may reduce mortality. Perhaps this is explained by the fact that children may feel the positive effects of remittances and return migration more, through better health and sociological care, than would others. Although we fail to see why such an effect is not observed with immunisation, unless programs are state and/ or aid funded thus unable to be influenced by the alleviation of credit constraints from remittances.

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Furthermore, if we follow similar principles then one could posit the opposite effect on life expectancy, given the interaction term is estimated with a negative sign, whilst the brain drain itself possesses a positive effect. This may suggest that once GDP exceeds some level, the brain drain would exhibit a negative effect on life expectancy. Although with reference to figure 11, FEa, the coefficient on the brain drain is over 16,000 times greater than that of its interaction with GDP (23.12 / 0.0014 16,514.29), suggesting GDP would have to increase to simply inconceivable levels before the brain drain reduces life expectancy. Similar insignificant coefficients are found with the DPT regressions, although we stress the fundamental limitations of interpreting insignificant coefficients.

Evidently, we do not find support for Haas, and if anything it would suggest countries do well by increasing skilled emigration regardless of GDP, given the positive effects on immunisation and life expectancy are significant, whilst that on mortality is insignificant.

Econometric issues

The regression assumptions stipulate conditional mean independence must hold (Stock and Watson, 2012).

That is for the panel regression,

where, = unobserved country effect

Assumption (1)

This states that the conditional distribution of the error given included variables must have a zero mean. If this fails then the estimates will be both biased and inconsistent. Below we explore the ways in which this assumption may be violated.
20

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8.1

Simultaneous causality

In the regressions we assume development indicators are a function of the regressors. However there may exist reverse causality between variables such as GDP and development indicators. For example, income may cause development, however lower development, expressed by lower health, could cause lower GDP as individuals contribution to output tends to diminish when health declines. We correct for this by lagging GDP, however our estimates are near identical.

8.2

Measurement Error

Furthermore, according to Stock and Watson (2012), any measurement error of a variable is captured by the disturbance term, thus resulting in correlation between the variable incorrectly measured and the disturbance term, violating assumption (1). Bhargava, Docquier and Moullan (2011) identify such a weakness with their measurement of the MBD. They report a risk of overestimating the MBD when measuring physicians by country of training if the country possesses regional training centres, and underestimating when there are no medical schools in the host country.

8.3

Omitted variable bias

The disturbance term captures everything not explained by the model, consequently any variable important for explaining the variation in the dependant variable, but excluded from the regression will exist in the error. If this variable is correlated with any included variable, then assumption (1) is violated. As we have discussed throughout our results, limited data meant we were unable to include literacy in our regressions despite previous research telling us it may play an important role, particularly in mortality and immunisation. Furthermore, literacy was correlated with many included variables and so may present a problem of OVB. We checked the robustness of our results by running the limited sub-sample with literacy terms included. The inclusion of literacy altered the vaccination estimates considerably, with variables changing sign and significance, which would suggest literacy may be important. Consequently, OVB may be present in these regressions and so further research is required to check the stringency of our final estimates against the inclusion of greater literacy observations. However we must be careful when making such simplified analysis given we were only able to run OLS estimation due to limited observations. Consequently it is possible that had we been able to run panel regressions the outcome may have been significantly different, and so our estimates may still be valid.

21

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The second assumption is of no serially correlated errors.

Assumption (2)
are independently and identically distributed from their joint distribution.

8.4

Serial correlation

Unfortunately serially correlated errors are a common problem of FE and RE models. Unobserved shocks to economic relationships may have prolonged effects. If so, ignoring then will generate inefficient estimates and biased standard errors. However we adopted the clustered standard errors approach in order to correct for any correlation within certain groups within which the error may be correlated.

Conclusion

Our regressions make clear predictions. We find the brain drain exhibits a positive relationship with life expectancy and immunisation, whilst the MBD does not appear to possess any significance. Nevertheless, if the MBD is so severe, reducing physicians sufficiently, then mortality, both infant and under-5 may rise, whilst measles immunisation may fall. Despite not having empirical justification, previous research suggests the benefits from reducing the MBD are limited.

In our regressions we control for certain brain drain channels; growth, remittances and physicians. If the brain drain affects development through these channels, then this will not be revealed by the brain drains coefficient, instead any such effect will be contained within the variable that the brain drain works through. The brain drain is estimated to have a significant and positive effect on life expectancy and immunisation and so there exists some channel, other than those already controlled for, that are explaining its positive effect. We hypothesise this may be the transfer of knowledge, particularly healthcare information; however we lack empirical justification.

Our results suggest the need for developing countries to actively operate and encourage some degree of skilled emigration, although it may be desirable to avoid a large outflow of healthcare workers to limit the possible negative effects on child mortality and measles immunisation. However it is likely the optimal rate,
22

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one which maximises development gains, will be country-specific. From a policy standpoint one could turn to the Philippines, a country which has recognised the benefits of remittances and actively encouraged skilled emigration for decades. Such polices have included deregulation and creation of a public body, the Philippine Overseas Employment Administration, which actively seeks to market Filipino workers abroad. Our results suggest other developing countries could do well by following similar strategies. Additionally we find little evidence to suggest the developmental benefits from skilled migration only exist once GDP achieves a certain level, as proposed by Haas (2008), and so developing countries, regardless of GDP should pursue skilled emigration. Nevertheless, fertility and HIV present a clear development constraint. Both these appear highly significant in our regressions. Consequently there is a continued need for polices to fight endemic disease and lower birth rates. Whats more, when pursuing some positive level of skilled emigration it would be desirable to manifest policies which maximise the potential gains and minimise any losses from skilled emigration. We hypothesise knowledge transfer may explain the positive brain drain effect. Consequently developing widespread access to global communications to facilitate the flow of information back to source countries may be one of many instruments to maximise such feedback effects.

We see a number of possible extensions to our research. First, it would be desirable to conduct research into the development effects of employing polices which aim to exploit the benefits of the brain drain. Does greater access to communication increase the flow of knowledge and technology back home? Secondly, it would be advisable to further examine the relationship between the brain drain and its channels controlled for in our regressions. Do remittances actually benefit development? Thirdly, if the brain drain does constrain development then policies introduced by developed countries to limit skilled migration such as the UK, should promote development in poorer countries that previously experienced high brain drain rates. Such policy changes provide a natural experiment with which cause and effect can be established. However our results suggest the opposite, negative effects from reducing the brain drain are likely.

Despite recent evidence, a consensus has yet to be reached regarding the effects of skilled emigration. The major barrier is data. Skilled emigration is a likely occurrence as developing countries grow and become increasingly integrated within the world economy. We believe it does not pose a serious threat, providing it is at manageable levels. Our results suggest countries could raise development by operating some degree of skilled emigration, and such effects will be magnified through policies to exploit the benefits. We look forward to future research within this and other similar areas.

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10

References

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2. Barro, R. and J-W. Lee (2010). A new data set of educational attainment in the world, 1950-2010. NBER, working paper no. 15902.

3. Beine, M., F. Docquier and H. Rapoport (2001). Brain drain and economic growth: Theory and evidence. Journal of Development Economics, 64(1): 275-289. 4. Beine, M., F. Docquier and H. Rapoport (2003). Brain drain and LDCs growth: Winners and Losers. The Institute for the Study of Labor (IZA), DP No. 819.

5. Berry, A. R. and R. Soligo (1969). Some welfare aspects of international migration. Journal of Political Economy, 77(5): 778-794.

6. Bhagwati, J. and K. Hamada (1973). The brain drain, international integration of markets for professionals and unemployment: A theoretical analysis. Journal of Development Economics, 1: 1942.

7. Bhagwati, J. (1976). The brain drain. International Social Science Journal, 28: 691-729.

8. Bhargava, A., F. Docquier and Y. Moullan (2010). Revised panel data set on physician emigration (1991-2004) [online]. Available from: http://perso.uclouvain.be/frederic.docquier/oxlight.htm [Accessed 03 January 2012].

9. Bhargava, A., F. Docquier and Y. Moullan (2011). Modelling the effect of physician emigration on human development. Economics and Human Biology, 9(2): 172-83.

10. Carrington, W. J. and E. Detragiache (1998). How big is the brain drain? IMF Working Paper, No. 98.

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11. Chen, M. and M. Ching (2000). A statistical analysis of life expectancy across countries using multiple regression [online]. Available from: http://www.seas.upenn.edu/~ese302/Projects/Project_2.pdf [Accessed 16 December 2011]. 12. Corts, R. (2007). Children and women left behind in labor sending countries: An appraisal of social risks. Global Report on Migration and Children.

13. Defoort, C. and G. Rogers (2002). Long-term trends in international migration: An analysis of the six main receiving countries. Population-E, 63(2): 299.

14. Defoort, C. (2006). Tendances de long terme des migrations internationales: Analyse a partir des 6 principaux pays receveurs: Universite de Louvain.

Defoort, C. (2006). Panel data set on skilled emigration rates. Evidence from the six major receiving countries (1975-2000) [online]. Available from: http://perso.uclouvain.be/frederic.docquier/oxlight.htm [Accessed 05 January 2012]. 15. Docquier, F. and H. Rapoport (2005). The economics of migrants remittances. Institute for the study of labor (IZA), DP No. 1531. 16. Docquier, F. and H. Rapoport (2006). The Brain Drain In Blume, L. and S. Durlauf (ed.) New Palgrave dictionary of Economics. 2nd edition. London: Palgrave and Macmillan.

17. Docquier, F. and H. Rapoport (2007). Skilled migration: The perspective of developing countries. Institute for the Study of Labor (IZA), DP No. 2873: 3.

18. Docquier, F. and H. Rapoport (2011). Globalization, brain drain and development. Institute for the study of labor (IZA), DP No. 5590. 19. Gibson, J. and D. McKenzie (2010). The economic consequences of brain drain of the best and brightest: Microeconomic evidence from five countries. World Bank, working paper no. 5394.

20. Gibson, J. and D. McKenzie (2011). Eight questions on the brain drain. Journal of Economic Perspectives, 25(3): 107-128.
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21. Grubel, H. B. and A.D. Scott (1966). The international flow of human capital. The American Economic Review, 56(2): 268-274.

22. Haas, H. (2007). Remittances, migration and social development. A conceptual review of the literature. United Nations Research Institute for Social Development (UNRISD), no. 34.

23. Johnson, H. G. (1967). Some economic aspects of the brain drain. The Pakistan Development Review, 7: 379-411.

24. Johnson, J.M. and M.C. Regets (1998). International mobility of scientists and engineers to the U.S.: Brain drain or brain circulation?. National Science Foundation, brief: 98-316.

25. Kugler, M. and H. Rapoport (2007). International labor and capital flows: Complements or substitutes?. Economic Letters, 94(2): 155-62.

26. Lien, D-H D. (1987). Economic analysis of brain drain. Journal of Development Economics, 25: 3343.

27. Mountford, A. (1997). Can a brain drain be good for growth in the source economy? Journal of Development Economics, 53(2), 287-303.

28. Stark, O., C. Helmenstein and A. Prskawetz (1997). A brain gain with a brain drain. Economics Letters, 55: 227-234.

29. Stark, O. (2004). Rethinking the brain drain. World Development, 32(1): 15-22.

30. Stock, J. and M. Watson (2012). Introduction to Econometrics. 3rd edition. Edinburgh: Pearson Education Limited. pp. 361-70.

31. Taylor, J.E. and I. Adleman. (1995). Village economies: The Design, Estimation and Use of VillageWide Economic Models. New York: Cambridge Press.

32. Todaro, M. P. and S.C. Smith (2009). Economic Development. 10th edition. Boston: Prentice Hall.

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33. Winters, A. and S. Yusuf (2007). Dancing with the Giants: China, India and the Global Economy. World Bank.

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11

Appendices

Table 1

Data sources and summary of variables, 1995-2005

Variable

Description

Source

No. of observati ons (of total 273 possible)

Mean

Standard deviation

le

Life expectancy at birth, total (years)

World Bank, World Development Indicators (WB, WDI)

268

58.89

9.41

iw

Improved water source (% of population with access)

WB, WDI

262

69.54

19.15

is

Improved sanitation facilities (% of population with access)

WB, WDI

262

45.80

27.66

mri

Mortality rate, infant (per 1,000 live births)

WB, WDI

270

64.82

32.02

mr5 phys1000 popgrowth fr hiv

Mortality rate, under-5 (per 1,000) Physicians (per 1,000 population) Population growth (annual %) Fertility rate, total (births per woman) Prevalence of HIV, total (% of population ages 15-49)

WB, WDI

270 261

97.74 0.60 1.92 4.54 2.91

58.40 0.96 1.21 1.52 5.02

WB, WDI WB, WDI WB, WDI

273 267 210

dpt

Immunisation, diphtheria, pertussis and tetanus (DPT) (% of children ages 12-23 months)

WB, WDI

263

73.43

20.12

measles

Immunisation, measles (% of children ages 12-23 months)

WB, WDI

263

72.97

19.32

hepc

Health expenditure per capita (current US$)

WB, WDI

260

44.61

52.87

hepcppp

Health expenditure per capita, PPP (constant 2005 international $)

WB, WDI

257

93.73

75.83

28

0948667 beds gdp Hospital beds (per 1,000 people) GDP per capita, PPP (constant 2005 international $) gdpg rem GDP per capita growth (annual %) Workers' remittances and compensation of employees, received (current US$) bd Brain drain. (lbd is the 5 year lag of BD) Defined as the ratio of the number of skilled emigrants ages 25+ to the six major receiving countries (USA, UK, Germany, France, Canada and Australia) to the total number of skilled natives Defoort, C. (2006). Panel data set on skilled emigration rates. Evidence from the six major receiving 174 0.19 0.21 WB, WDI WB, WDI 259 193 WB, WDI WB, WDI 69 249 3.27 1973.8 5 2.26 8.55 5.41 2.35 3.15 1278.86

ages 25+ (residents + emigrants). Skilled countries (1975workers are those with a post-secondary certificate. mbd Medical brain drain. (lmbd is the 5 year lag of MBD) Defined as the number of migrant physicians from the source country relative to the total number of trained physicians from the source country (migrants + domestically employed physicians). Migrant physicians are defined from their country of training. humt Tertiary educated worker stock (% of population ages 15+ enrolled in tertiary education) Barro, R. J and Lee, R-W. (2010). A new data set of educational attainment in the world, 19502010. humts Human capital stock (% of population ages 15+ enrolled in secondary and tertiary education) Barro, R. J and Lee, R-W. (2010). A new data set of educational 29 183 34.88 24.77 183 5.32 6.71 Bhargava, A. and Docquier, F. (2010). Revised panel data set on physician emigration (1991-2004) 261 0.08 0.12 2000).

0948667 attainment in the world, 1950 2010. lit Literacy rate, adult total (% of people ages 15+) oda Net official development assistance received (% of GNI) lnlbdone Five year lag of the natural logarithm of (BD + 1) lnlmbdone Five year lag of the natural logarithm of (MBD + 1) lgdpxlbd Multiplicative term, capturing interaction between the brain drain and GDP per capita, both terms lagged 5 years. lgdpxlmbd Multiplicative term, capturing interaction between the medical brain drain and GDP per capita, both terms lagged 5 years. SSA Binary variable equal to 1 if country is part of the Sub Saharan Africa region 273 235 135.53 272.10 228 404.80 672.58 261 0.07 0.11 253 0.16 0.16 WB, WDI 243 12.73 12.80 WB, WDI 36 66.56 21.30

D95 D00

Binary variable equal to 1 if year is 1995 Binary variable equal to 1 if year is 2000

273 273

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Figure 1: Life expectancy and the brain drain, 1995-2005

80 50 60 70

7.91

30
0

40

.2

.4

.6

.8

Brain drain, 5 year lag Life expectancy Fitted values

Figure 2: Life expectancy and the medical brain drain, 1995-2005

80 50 60 70

-6.31

30
0

40

.2

.4 Medical brain drain, 5 year lag

.6

.8

Life expectancy

Fitted values

31

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Figure 3: Mortality rate, under-5 and the brain drain, 1995-2005

6 3 4 5

-1.06

2
0

.2

.4

.6

.8

Five year lag of the natural logarithm of (BD + 1) Mortality rate, under-5 Fitted values

Figure 4: Mortality rate, under-5 and the medical brain drain, 1995-2005
6

0.41

2
0

.2

.4

.6

Five year lag of the natural logarithm of (MBD + 1) Mortality rate, under-5 Fitted values

32

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Figure 5: Mortality rate, infant and the brain drain, 1995-2005

5 4.5

-0.91

3.5 2.5
0

.2

.4

.6

.8

Five year lag of the natural logarithm of (BD + 1) Mortality rate, infant Fitted values

Figure 6: Mortality rate, infant and the medical brain drain, 1995-2005
5 4.5 4

3.5

0.31

2.5
0

.2

.4

.6

Five year lag of the natural logarithm of (MBD + 1) Mortality rate, infant Fitted values

33

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Figure 7: Immunisation, measles and the brain drain, 1995-2005

4.5

3.5

0.31

.2

.4

.6

.8

Five year lag of the natural logarithm of (BD + 1) Natural log of immunisation, measles Fitted values

Figure 8: Immunisation, measles and the medical brain drain, 1995-2005

4.5 4

-0.25

3.5 3
0

.2

.4

.6

Five year lag of the natural logarithm of (MBD + 1) Natural log of immunisation, measles Fitted values

34

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Figure 9: Immunisation, dpt and the brain drain, 1995-2005

4.5

0.35

3.5 3
0

.2

.4

.6

.8

Five year lag of the natural logarithm of (BD + 1) Natural log of immunisation, dpt Fitted values

Figure 10: Immunisation, dpt and the medical brain drain, 1995-2005
4.5 3.5 4

-0.34

3
0

.2 .4 Five year lag of the natural logarithm of (MBD + 1) Natural log of immunisation, dpt Fitted values

.6

35

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Figure 11

Life expectancy, 1995-2005

-----------------------------------------------------------------------------Variable | OLS RE FEa FEb -------------+---------------------------------------------------------------is | .01725981 .0878997*** .29807186* .15897068* hiv | -.49508267*** -.71676939*** -.73255196*** -.78847923*** fr | -2.615218*** -2.4875783*** -.76842476 -1.9603222*** gdp | .0010445* .00120457* .00092882 .00055489 phys1000 | .13745163 -.96287242 -1.2423253 lrem | -1.904e-10 4.236e-11 1.030e-10 SSA | -4.3644428** -2.6551247* (omitted) (omitted) lbd | -10.267165 2.961683 23.12259** 13.94688* lmbd | 14.342124 7.5087324 13.916721 lgdpxlbd | .00419433** -.00018158 -.00144589 lgdpxlmbd | -.00386948 -.00239343 -.00371628 _cons | 70.669257*** 66.548038*** 46.319069*** 58.496301*** -----------------------------------------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

Figure 12

Life expectancy, 1995-2005 (FEb)

Number of obs Number of groups = = 188 66 2 2.8 3 22.14 0.0000

Fixed-effects (within) regression Group variable: id R-sq: within = 0.5394 between = 0.7120 overall = 0.6885

Obs per group: min = avg = max = F(5,65) Prob > F = =

corr(u_i, Xb)

= -0.2435

(Std. Err. adjusted for 66 clusters in id) -----------------------------------------------------------------------------| Robust le | Coef. Std. Err. t P>|t| [95% Conf. Interval] -------------+---------------------------------------------------------------is | .1589707 .0876916 1.81 0.074 -.0161616 .3341029 hiv | -.7884792 .1550425 -5.09 0.000 -1.09812 -.478838 fr | -1.960322 .6576929 -2.98 0.004 -3.273825 -.6468188 gdp | .0005549 .0005197 1.07 0.290 -.000483 .0015927 SSA | (omitted) lbd | 13.94688 8.255334 1.69 0.096 -2.540161 30.43392 _cons | 58.4963 6.427601 9.10 0.000 45.6595 71.33311 -------------+---------------------------------------------------------------sigma_u | 5.1193547 sigma_e | 1.9008825 rho | .87883248 (fraction of variance due to u_i) ------------------------------------------------------------------------------

36

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Figure 13

Mortality rate, under-5, 1995-2005

-----------------------------------------------------------------------------Variable | OLS RE FEa FEb -------------+---------------------------------------------------------------lnfr | .54151522*** .49954844*** .46133274** .39190898*** lngdp | -.29997101** -.14747395 .05948546 -.0709437 lnphys1000~e | -.17101888 -.21902196* -.14508461 -.16909969* lnlrem | .01547154 -.0135981* -.0148102 D95 | .14234702** .1340805*** .19551251*** .20843379*** D00 | .09083946*** .0886583*** .12361646*** .11696313*** SSA | .39298905*** .47958694*** (omitted) (omitted) lnlbdone | .01860823 -.27315525 -.17818329 .00751831 lnlmbdone | -.11337436 .32103118 .13411447 lgdpxlnlbd~e | -.00028676 -.00022177** -.00011392 lgdpxlnlmb~e | -.00024425 -.00016367 -.0000127 _cons | 5.4536389*** 4.8468801*** 3.5061399*** 4.294145*** -----------------------------------------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

Figure 14

Mortality rate, under-5, 1995-2005 (FEb)

Number of obs Number of groups Obs per group: min avg max F(6,81) Prob > F = = = = = = = 232 82 1 2.8 3 48.35 0.0000

Fixed-effects (within) regression Group variable: id R-sq: within = 0.7530 between = 0.6255 overall = 0.5957 = 0.5338

corr(u_i, Xb)

(Std. Err. adjusted for 82 clusters in id) -----------------------------------------------------------------------------| Robust lnmr5 | Coef. Std. Err. t P>|t| [95% Conf. Interval] -------------+---------------------------------------------------------------lnfr | .391909 .1211969 3.23 0.002 .1507651 .6330529 lngdp | -.0709437 .0681937 -1.04 0.301 -.2066277 .0647403 lnphys1000~e | -.1690997 .0916711 -1.84 0.069 -.3514964 .013297 D95 | .2084338 .0287584 7.25 0.000 .1512135 .2656541 D00 | .1169631 .0145793 8.02 0.000 .0879549 .1459713 SSA | (omitted) lnlbdone | .0075183 .0940088 0.08 0.936 -.1795296 .1945662 _cons | 4.294145 .5386081 7.97 0.000 3.222484 5.365806 -------------+---------------------------------------------------------------sigma_u | .52247586 sigma_e | .08825088 rho | .97226114 (fraction of variance due to u_i) -----------------------------------------------------------------------------37

0948667

Figure 15

Mortality rate, under-5, OLS comparison table for FEb model, with and without literacy terms, 1995-2005
---------------------------------------------Variable | OLS_no_lit OLS_lit -------------+-------------------------------lnfr | .67659486*** .56287333 lngdp | -.37450872*** -.23326069* lnphys1000~e | -.08172635 -2.277021 D95 | .09885329** .25251087 D00 | .04797203** .03042358 SSA | .28625975** .15677284 lnlbdone | -.80588865*** -.55049617** lnlit | -.26195275 lnlitxl~1000 | .44886917 _cons | 6.1488774*** 6.5527437*** ---------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

Figure 16

Mortality rate, under-5, IV estimation for FEb model, 1995-2005

Number of obs Number of groups Obs per group: min avg max Wald chi2(5) Prob > chi2 = = = = = = = 160 81 1 2.0 2 488784.36 0.0000

Fixed-effects (within) IV regression Group variable: id R-sq: within = 0.6504 between = 0.5928 overall = 0.5908 = 0.0957

corr(u_i, Xb)

-----------------------------------------------------------------------------lnmr5 | Coef. Std. Err. z P>|z| [95% Conf. Interval] -------------+---------------------------------------------------------------lnfr | 1.236348 .5797657 2.13 0.033 .100028 2.372668 lngdp | -.0379753 .0634894 -0.60 0.550 -.1624122 .0864615 lnphys1000~e | -.0124883 .3240718 -0.04 0.969 -.6476574 .6226808 D95 | (omitted) D00 | .0531933 .0491861 1.08 0.279 -.0432096 .1495963 SSA | (omitted) lnlbdone | -.038457 .3584546 -0.11 0.915 -.7410151 .6641011 _cons | 2.843248 .9642262 2.95 0.003 .9533991 4.733096 -------------+---------------------------------------------------------------sigma_u | .45633506 sigma_e | .07798887 rho | .97162117 (fraction of variance due to u_i) -----------------------------------------------------------------------------F test that all u_i=0: F(80,74) = 36.75 Prob > F = 0.0000 -----------------------------------------------------------------------------Instrumented: lnfr Instruments: lngdp lnphys1000one D00 SSA lnlbdone lnlfr 38

0948667

Figure 17

Mortality rate, infant, 1995-2005

-----------------------------------------------------------------------------Variable | OLS RE FEa FEb -------------+---------------------------------------------------------------lnfr | .40642423*** .41887586*** .41766386*** .33521293*** lngdp | -.24443619** -.10612749 .04640097 -.07040135 lnphys1000~e | -.16094529 -.17137521* -.10378454 -.15072887* lnlrem | .01389027 -.01149721* -.01305717 D95 | .14174247*** .12869905*** .17483475*** .18361226*** D00 | .0934732*** .08256539*** .10699212*** .10287661*** SSA | .25629432** .34077422*** (omitted) (omitted) lnlbdone | .13273936 -.03484842 .20200043 .057301 lnlmbdone | -.03015689 .34238666 .25762883 lgdpxlnlbd~e | -.00029148* -.00023874** -.00012832 lgdpxlnlmb~e | -.00028678 -.00016865 -.00006676 _cons | 4.9585797*** 4.2920851*** 3.2275534*** 4.0191143*** -----------------------------------------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

Figure 18

Mortality rate, infant, 1995-2005 (FEb)

Number of obs Number of groups = = 232 82 1 2.8 3 47.70 0.0000

Fixed-effects (within) regression Group variable: id R-sq: within = 0.7737 between = 0.5631 overall = 0.5503

Obs per group: min = avg = max = F(6,81) Prob > F = =

corr(u_i, Xb)

= 0.4551

(Std. Err. adjusted for 82 clusters in id) -----------------------------------------------------------------------------| Robust lnmri | Coef. Std. Err. t P>|t| [95% Conf. Interval] -------------+---------------------------------------------------------------lnfr | .3352129 .1047966 3.20 0.002 .1267005 .5437253 lngdp | -.0704014 .0545945 -1.29 0.201 -.1790273 .0382246 lnphys1000~e | -.1507289 .0885194 -1.70 0.092 -.3268547 .025397 D95 | .1836123 .0248962 7.38 0.000 .1340767 .2331478 D00 | .1028766 .0127493 8.07 0.000 .0775095 .1282437 SSA | (omitted) lnlbdone | .057301 .065695 0.87 0.386 -.0734113 .1880133 _cons | 4.019114 .4412919 9.11 0.000 3.141082 4.897147 -------------+---------------------------------------------------------------sigma_u | .43326535 sigma_e | .07331484 rho | .97216346 (fraction of variance due to u_i) ------------------------------------------------------------------------------

39

0948667

Figure 19

Mortality rate, infant, OLS comparison table for FEb model, with and without literacy terms, 1995-2005 ---------------------------------------------Variable | OLS_no_lit OLS_lit -------------+-------------------------------lnfr | .55736162*** .4778657 lngdp | -.34353281*** -.21167889* lnphys1000~e | -.04755297 -.18474609 D95 | .08947571** .25351503 D00 | .04301054** .07617599 SSA | .151329 .03382402 lnlbdone | -.72910988*** -.70983339*** lnlit | -.08298542 lnlitxl~1000 | -.01622574 _cons | 5.784391*** 5.43395*** ---------------------------------------------legend: * p<.1; ** p<.05; *** p<.01 Mortality rate, infant, IV estimation for FEb model, 1995-2005
Number of obs Number of groups Obs per group: min avg max Wald chi2(5) Prob > chi2 = = = = = = = 160 81 1 2.0 2 494120.75 0.0000

Figure 20

Fixed-effects (within) IV regression Group variable: id R-sq: within = 0.6211 between = 0.5428 overall = 0.5410 = -0.0821

corr(u_i, Xb)

-----------------------------------------------------------------------------lnmri | Coef. Std. Err. z P>|z| [95% Conf. Interval] -------------+---------------------------------------------------------------lnfr | 1.155413 .5312436 2.17 0.030 .1141944 2.196631 lngdp | -.0369959 .0581758 -0.64 0.525 -.1510183 .0770265 lnphys1000~e | .0035482 .2969494 0.01 0.990 -.5784619 .5855583 D95 | (omitted) D00 | .0408412 .0450696 0.91 0.365 -.0474936 .1291759 SSA | (omitted) lnlbdone | -.0430935 .3284546 -0.13 0.896 -.6868526 .6006657 _cons | 2.611163 .8835275 2.96 0.003 .8794804 4.342845 -------------+---------------------------------------------------------------sigma_u | .39928812 sigma_e | .07146177 rho | .96896285 (fraction of variance due to u_i) -----------------------------------------------------------------------------F test that all u_i=0: F(80,74) = 36.46 Prob > F = 0.0000 -----------------------------------------------------------------------------Instrumented: lnfr Instruments: lngdp lnphys1000one D00 SSA lnlbdone lnlfr 40

0948667

Figure 21

Immunisation, measles, 1995-2005

-----------------------------------------------------------------------------Variable | OLS FE REa REb -------------+---------------------------------------------------------------lnfr | -.3126562*** .05370398 -.25380892*** -.25438545*** lngdp | .01189961 -.11424869 .01168254 .02743078 lnphys1000~e | .12482349 .03412666 .1282764* .12992592* lnlrem | .01954338 .01166157 .01682834 .01442017 D95 | -.05644085 -.17063249* -.06781034 -.06953292 D00 | -.05577139* -.12613866** -.06741499** -.06871941** SSA | .06087378 (omitted) .03940784 .04334266 lnlbdone | .26382807 .72849417 .31070261 .33305965** lnlmbdone | -.13714013 .27043021 -.1698965 lgdpxlnlbd~e | .00004587 -.00021265 .00001717 lgdpxlnlmb~e | .00006359 -.00012341 .00007956 _cons | 4.1761435*** 4.853542*** 4.1605623*** 4.0889768*** -----------------------------------------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

Figure 22

Immunisation, measles, 1995-2005 (REb)

Number of obs Number of groups = = 166 67 1 2.5 3 102.71 0.0000

Random-effects GLS regression Group variable: id R-sq: within = 0.1764 between = 0.4380 overall = 0.3955

Obs per group: min = avg = max = Wald chi2(8) Prob > chi2 = =

corr(u_i, X)

= 0 (assumed)

(Std. Err. adjusted for 67 clusters in id) -----------------------------------------------------------------------------| Robust lnmeasles | Coef. Std. Err. z P>|z| [95% Conf. Interval] -------------+---------------------------------------------------------------lnfr | -.2543855 .0847212 -3.00 0.003 -.4204359 -.088335 lngdp | .0274308 .0629129 0.44 0.663 -.0958762 .1507378 lnphys1000~e | .1299259 .0677048 1.92 0.055 -.002773 .2626248 lnlrem | .0144202 .0124673 1.16 0.247 -.0100153 .0388556 D95 | -.0695329 .0436219 -1.59 0.111 -.1550304 .0159645 D00 | -.0687194 .0284056 -2.42 0.016 -.1243934 -.0130454 SSA | .0433427 .0752643 0.58 0.565 -.1041727 .190858 lnlbdone | .3330597 .1379621 2.41 0.016 .0626588 .6034605 _cons | 4.088977 .5204927 7.86 0.000 3.06883 5.109124 -------------+---------------------------------------------------------------sigma_u | .16499455 sigma_e | .15570222 rho | .52895113 (fraction of variance due to u_i) 41

0948667

Figure 23

Immunisation, measles, OLS comparison table for REb model, with and without literacy terms, 1995-2005 ---------------------------------------------Variable | OLS_no_lit OLS_lit -------------+-------------------------------lnfr | -.31171854*** -.89709901*** lngdp | .03475799 .09709225 lnphys1000~e | .12624388* -.10128434 lnlrem | .01730108 .06934563*** D95 | -.05776058 .61414375*** D00 | -.05797615** .1206561 SSA | .06228896 .52293726** lnlbdone | .36079324*** .77817079* lnlit | -.49589206** lnlitxl~1000 | .0687334 _cons | 4.0453836*** 5.0704602*** ---------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

Figure 24

Immunisation, DPT, 1995-2005

-----------------------------------------------------------------------------Variable | OLS FE REa REb -------------+---------------------------------------------------------------lnfr | -.34017555*** .07231197 -.24908341*** -.26330562*** lngdp | .03722364 -.04073179 .05521408 .03982615 lnphys1000~e | .02538428 .04259692 .03540441 .0345349 lnlrem | .01028103 -.00780885 .00330054 .0021889 D95 | -.0876172** -.22535899** -.11337889*** -.11463339*** D00 | -.07333311** -.15512895*** -.0903595*** -.09223441*** SSA | .00419098 (omitted) -.03086884 -.01843622 lnlbdone | .26251253 1.1579265 .42510933 .3109316** lnlmbdone | .23865418 .41179064 .09534405 lgdpxlnlbd~e | .00003332 -.00043844 -.00005114 lgdpxlnlmb~e | -.00007452 -.00014836 -.00001634 _cons | 4.2823097*** 4.6712343*** 4.17101*** 4.3305835*** -----------------------------------------------------------------------------legend: * p<.1; ** p<.05; *** p<.01

42

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Figure 25

Immunisation, DPT, 1995-2005 (REb)

Number of obs Number of groups = = 166 67 1 2.5 3 78.35 0.0000

Random-effects GLS regression Group variable: id R-sq: within = 0.2622 between = 0.3985 overall = 0.3874

Obs per group: min = avg = max = Wald chi2(8) Prob > chi2 = =

corr(u_i, X)

= 0 (assumed)

(Std. Err. adjusted for 67 clusters in id) -----------------------------------------------------------------------------| Robust lndpt | Coef. Std. Err. z P>|z| [95% Conf. Interval] -------------+---------------------------------------------------------------lnfr | -.2633056 .0825156 -3.19 0.001 -.4250332 -.1015781 lngdp | .0398262 .0571319 0.70 0.486 -.0721503 .1518026 lnphys1000~e | .0345349 .0675585 0.51 0.609 -.0978773 .1669471 lnlrem | .0021889 .0113966 0.19 0.848 -.0201479 .0245257 D95 | -.1146334 .042707 -2.68 0.007 -.1983375 -.0309293 D00 | -.0922344 .0296109 -3.11 0.002 -.1502707 -.0341981 SSA | -.0184362 .0723816 -0.25 0.799 -.1603015 .1234291 lnlbdone | .3109316 .1391428 2.23 0.025 .0382168 .5836464 _cons | 4.330584 .4879107 8.88 0.000 3.374296 5.286871 -------------+---------------------------------------------------------------sigma_u | .17711688 sigma_e | .15039943 rho | .58103667 (fraction of variance due to u_i) ------------------------------------------------------------------------------

Figure 26

Immunisation, DPT, OLS comparison table for REb model, with and without literacy terms, 1995-2005 ---------------------------------------------Variable | OLS_no_lit OLS_lit -------------+-------------------------------lnfr | -.34694239*** -.95025827*** lngdp | .04054628 .00932704 lnphys1000~e | .02467675 -1.4386747 lnlrem | .009144 .07288036*** D95 | -.09080664** .25378886 D00 | -.07858911** -.00283669 SSA | .01213638 .41916529*** lnlbdone | .34968686*** .71014354* lnlit | -.22211428 lnlitxl~1000 | .31913353 _cons | 4.293091*** 4.8694995*** ---------------------------------------------legend: * p<.1; ** p<.05; *** p<.01
43