Reversing the Brain Drain: Is it Beneficial?

•I build a life cycle model with two countries, one rich and one poor.•I examine the costs and benefits of calling back workers from the rich country.•I empirically estimate the spillovers resulting from the return migration of workers.•Calling back workers of low skill levels results in welfare loss.•Welfare gain is maximized by calling back middle-aged workers with high education. This paper investigates costs and benefits of calling back expatriates of a developing country. I employ a life cycle model with a rich and poor country with endogenous migration and return migration. Cost of bringing back a worker is the compensation that is paid to him while the benefit is the increased output because of his higher skill level and positive externalities, which are empirically estimated, from him resulting in higher skill levels for local workers. Results show that welfare gains are maximized when workers with skill levels 1.28 standard deviations above the domestic mean skill level are called back.