The Global Race for Talent: Brain Drain, Knowledge Transfer, and Growth.

This article examines the impact of international migration of inventors on talent allocation, knowledge diffusion, and productivity growth through a novel two-country innovation-led endogenous growth model calibrated with micro-level patent data from the U.S.–European Union (EU) corridor. Empirically, it documents asymmetric migration flows characterized by brain drain from the EU to the U.S., a 33% increase in migrants' patenting productivity after migration, continued collaboration between migrants and origin-country inventors, and a 16% productivity gain for local inventors collaborating with emigrants. Quantitatively, the model shows that knowledge spillovers from migrants partly offset the negative effects of brain drain on innovation, and that policies such as EU tax cuts for foreign and return inventors can increase EU innovation in the short run but may reduce long-run growth due to diminished knowledge transfers, while expanding U.S. immigration caps (e.g., H1B visas) enhances innovation and growth in both regions by better sorting inventors to productive locations. The study highlights the complex trade-offs in migration and innovation policies and suggests avenues for future research on occupational choice, inequality, and strategic network formation among high-skilled migrants.