What is 'Brain Drain'?

Brain drain is a slang term indicating a significant emigration of educated or talented individuals. A brain drain can result from turmoil within a nation, the existence of favorable professional opportunities in other countries or from a desire to seek a higher standard of living. In addition to occurring geographically, brain drain may occur at the organizational or industrial levels when workers perceive better pay, benefits or upward mobility within another company or industry.

BREAKING DOWN 'Brain Drain'

Brain drains cause countries, industries and organizations to lose valuable professionals. The term often describes the departure of doctors, scientists, engineers or financial professionals. When these people leave, their places of origin are harmed in two ways. First, expertise is lost with each emigrant, diminishing the supply of that profession. In the case of geographic brain drain, the country's economy is harmed because each professional represents surplus spending units. Professionals often earn large salaries, so their departure reduces consumer spending in that country.

Geographic, Organizational and Industrial Brain Drain

Brain drain, also known as human capital flight, can occur on several levels. Geographic brain drain occurs when talented professionals flee one country or region within a country in favor of another. Organizational brain drain involves the mass exodus of talented workers from a company, often because they sense instability, a lack of opportunity within the company, or they may feel that they can realize their career goals more easily at another company. Industrial brain drain happens when skilled workers exit not only a company but an entire industry.

Several common causes precipitate brain drain on the geographic level. Political instability, poor quality of life, limited access to health care and a dearth of economic opportunity prompt skilled and talented workers to leave source countries for places that offer better living conditions and greater opportunities. Organizational and industrial brain drain is a byproduct of a rapidly evolving economic landscape in which companies and industries unable to keep up with technological and societal changes lose their best workers to those that can.

Example of Brain Drain

As of 2017, brain drain has been a significant consequence of the ongoing Puerto Rican debt crisis. In particular, the exodus of skilled medical professionals has hit the island hard. While more than half of Puerto Rico's residents receive Medicare or Medicaid, the island receives significantly fewer federal funds to pay for these programs than similarly sized states on the mainland, such as Mississippi. This combined with the island's dire financial situation precludes its ability to offer competitive compensation to doctors, nurses and other medical staff. As a result, such professionals are leaving the island en masse for more lucrative opportunities on the mainland. This situation was exacerbated by Hurricane Maria, which occurred on September 2, 2017.

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