Ethnic discrimination and the migration of skilled labor

We develop a model of interdependency between emigration, education investment, and discrimination, in the context of an ethnically divided developing economy. Assuming a rent-extraction basis for discrimination, we first endogenize ethnic discrimination in the benchmark case of an economy closed to migration, and then explore how migration prospects affect ethnic inequality. Under the free migration assumption, we find the intuitive result that migration prospects have a protective effect on the minority. Immigration restrictions set by receiving countries, on the other hand, have the paradoxical effect of creating migration flows that would otherwise have remained latent. © 2002 Elsevier Science B.V. All rights reserved.