Economy & Business, Volume 16, 2022

Abstract: Some countries accept study migrants to increase domestic skilled human capital. They induce study migrants to remain as skilled workers after education. At the same time, due to the shortage of unskilled labour, they tend to deregulate immigration policies and admit non-natives to take skilled and unskilled jobs. This study investigates the effectiveness of study migrants’ acceptance policies under different immigration policies. In particular, this study examines how study migrants’ human capital formation is affected by immigration policies. This study shows that total employed skilled human capital built by study migrants decreases as immigration policies are deregulated. This is because deregulation can lower the incentive of study migrants to produce skilled human capital. Therefore, deregulated immigration policies are not necessarily compatible with study migrants’ acceptance policies. This study further shows that by giving study migrants with a low innate ability pecuniary benefits such as a discounted tuition fee or a scholarship, host countries can alleviate the harmful effects of incompatibility. Our results suggest that governments should conduct immigration policies, taking its possible negative effects on study migrants’ acceptance policies into account, and that they can partly reduce such effects by implementing additional policies.