Labor Mobility or Brain Drain? The Role of College Completion Time

Abstract

I study the effect of graduating within the nominal length of a university degree on the probability of working abroad after graduation. I solve for endogeneity by exploiting the exogenous variation in the probability of graduating on time that has been induced by a recent reform of the Italian academic system. I find that graduating on time increases the probability of working abroad at 1, 3, and 5 years from graduation. Results are stronger for males at 5 years from graduation claiming a brain drain effect measured in a 10.5 percentage points increase. I provide evidence that the brain drain effect is due to worsened labor conditions at 1 year from graduation.