Canadian Brains on the Move

February 25 2006 - A study recently published by the C.D. Howe Institute shows that the slowdown of Canada's productivity growth and the widening gap between Canadian and US per capita incomes in recent years has led to fresh concerns about a brain drain of highly qualified individuals and entrepreneurs. The study takes the form of a collection of essays entitled Brains on the Move and focuses on the importance of labour mobility to a nation's economy.

While concerns about a brain drain from Canada to the USA have been around for decades, the study highlights a subtle shift in the kinds of brains emigrating in recent years. There is vigorous competition between developed countries to acquire knowledge and develop leading-edge technology by attracting highly skilled professionals and technical workers. In one essay, Stephen Easton examines trends in the flows of scientists and economists from Canada to the United States. His findings reveal that Canadian scientists are now more than twice as likely to move to the US as they were in the 1960s.There has also been a significant increase in the likelihood that Canadian-trained economists will work outside Canada.

In his essay, William Gibson looks at Canadians who choose to obtain at least some of their education in the USA. Canadians are much more likely to study in the United States than citizens of other countries - and the trend is growing. And students who are educated in the US are more likely to look for subsequent employment there.

In another essay, Richard Harris focuses on what he calls the 'Wayne Gretzky model' of the brain drain. This model proposes that, whereas the number of talented people moving south of the border might be small, they include 'superstars' whose emigration has a disproportionate effect on Canada's economy. Moreover, while knowledge spillovers increasingly drive economic growth, emigration of highly trained and talented people from Canada to the USA creates a permanent knowledge gap and sustains an increasing per capita income gap between the two countries.

Elsewhere in the book attention is paid to:

the effect of government policies on the quality of entrepreneurs a country may attract;
• the effect of 'cultural clustering' in attracting talented individuals, particularly those from less-developed countries, to join their ethnic compatriots in a specific location; and
• the effect of immigration policies on flows of ncreasingly globally mobile and highly talented individuals.

Increasing economic integration between Canada and the US, as a result of the North American Free Trade Agreement, has stalled since 9/11, but there are calls for the freer movement of labour between the two countries. If this happens there may be one of two effects:

1. The flow of labour out of Canada could produce a growing skills shortage in Canada, leading to a reduction in the wage gap between the two countries.
2. Investment and jobs could move to Canada to meet the supply of Canadian-grown brains.

Either way, the concept of an integrated labour market in North America will become a matter of active debate - one, the study concludes, that will rival in intensity the free-trade debate of the !980's.

the study is available for purchase on the C.D. Howe website.