HRSDC-IC-SSHRC Skills Research Initiative

Working Paper Series

Brain Drain and Return: Evidence from Longitudinal Tax File Records
by Ross Finnie.

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Abstract

This paper exploits the unique strengths of the tax-based Longitudinal Administrative Database (LAD) to measure the flows of Canadians to other countries and the patterns of return over the period 1982-2003. Overall, approximately .01 percent (i.e., one tenth of one percent) of the adult population leaves the country in any given year. Departure rates have generally moved with the state of the Canadian economy, but the trends have clearly been driven by more than this: declining in the 1980s as the economy was going well; turning up towards the end of the decade, but before the economy began to stall in 1989; rising through the early part of the 1990s as the economy was mired in a deep recession, but then continuing to rise through 1997, by which time a strong recovery was underway; and then declining sharply since 2000 - thus stemming what many had thought was an inexorable upwards trend - when economic factors were fairly stable. Departure rates decline with age (except for the youngest group); are lower for couples without children than other family types; are high for those in British Columbia, quite low for Francophone Quebecers, and very high for Anglophones in that province; are somewhat lower for those on EI and substantially higher for those at higher income levels; and are very much higher for recent immigrants. Exit rates for those at higher income levels shifted upwards in the 1990s (the "brain drain" phenomenon?), but returned to pre-1990s rates in more recent years in the case of men, while the shift was maintained for women. Only a minority of those who leave ever return: about 15 percent within five years of their departure. Return rates have, however, increased significantly since 2000 - mirroring to a large extent what was happening on the departure side.