Tuesday, June 17, 2008

More Burgh Brain Drain

In Pittsburgh, and the entire Rust Belt region, I find myself defending a lonely position. Trying to retain local graduates is bad policy. But the drumbeat to stem the flow of out-migration is nothing if not persistent:

Ann Dugan, executive director of the Institute for Entrepreneurial Excellence at Pitt's Katz School of Business, said she'd want to explore the data to answer several questions.

She speculated about the difficulties in attracting top nursing school faculty, reaching younger and a broader range of students plus the dominance of two giants in the regional health care industry, Highmark and UPMC.

Ms. Dugan, a member of the consortium's economics committee, said: "I look at these kind of indicators and say: OK, what are we going to do about it? What are the industry factors going on there? What can we do to make it more competitive?

"We talk about the brain drain but young people are going to go where there's competitive wage rates. The goal is to keep them in the region."

The simple answer to the problem would seem to be to raise the pay. I doubt that option is palatable, particularly to smaller businesses in the health care industry. The good news is that talent migration is more complicated than wage differentials. In an environment of complete information, we would expect young adults to seek the best wage opportunities. However, even in the ideal case, people don't always behave so rationally.

There are a number of questions that should be asked, but are overlooked because of the obsession with stopping brain drain (out-migration). Why does talent graduating from a school located in a top-paying region for their field move somewhere else? Why do some graduates stay in places where there is a glut of talent, thereby depressing wages? Until Pittsburgh begins to see itself in the context of a global labor market, I doubt any blue ribbon panel will solve the above problem.

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