1. University quality, interregional brain drain and spatial inequality: the case of Italy Motivation and objectives This research aimed at analyzing and understanding the determinants of the interregional migration choices of Italian students-graduates. Fig. 1 The brain drain of 2004 students-graduates born in South Italy (Southerns) Background and main question In general, the outflow of students-graduates is the outcome of two sequential migration choices taken at two different moments: before enrolment (where to study?) and after graduation (where to work?). Fig. 1 shows the outflow of students and graduates from South Italy (for the sake of simplicity, that of Central Northern ones is omitted). To have an idea of the phenomenon, it is enough to stress that three years after graduation almost 41.5% of 2004 graduates born in Southern Italy works in Central-North Italy (CN). This implies a significant loss of human capital in an area that already shows significant socio-economic gaps with respect to the more industrialized CN. Given the increasing importance of universities as key driver of economic development, and as attraction poles for talents, this research aims at evaluating to what extent university quality influences these migration choices. Might university quality be “used” as a policy instrument to tackle with the effects of brain drain on human capital accumulation and regional growth? Data and Methodology The student information used comes from the last survey administered by the Italian National Statistics Institute on Italian graduate labour market entry conditions (ISTAT, 2009). This survey was conducted in 2007 on a cohort of students who graduated in 2004 and included 47,342 individuals and represents 17.3% of the cohort of 2004 Italian graduates (260,070 individuals). Thanks to the carry-over coefficients, sample results can be generalized. Students-graduates are considered ‘migrants’ if they moved from one province of macro area i to a province in macro area j (i= 1, 2; Southern provinces, Central-North provinces). Fig. 2 summarizes the sequential choices considered in the analysis. Fig. 2 The sequential migration choices of Italian students-graduates: 2 relevant moments: before enrolment and after graduation This database was matched with university level data on research quality in the period 2001-2003 published by the Italian Ministry of Education and Research (MIUR, 2007), with ISTAT data on value added and employment, and on quality of life at NUTS3 level (province). Modelling approach: two stage backward stepwise probability model (individual data weighted using ISTAT carry-over coefficients). Clearly, as individual migration choice depends also on the socio-economic differences between province of origin and of destination, a set of variables accounting for that was included. Furthermore, I controlled for individual characteristics, high-school and university performances, field of study, family standard of living and background, and agglomeration economies. Results on the role of University quality The econometric estimation suggests, among others, the following results: 1 st stage migration (before enrolment) The higher the research quality of the universities in the region of origin of the student, the lower the probability he/she will migrate to a province in the other macro area. At the same time, the higher the research quality of the university in the destination province, the higher the probability an individual will migrate. 2 nd stage migration (after graduation) - If the student did not move to study: the higher the quality of the university attended, the lower the probability he/she will move after graduation (an higher university quality acts as a signal for local employees); - If the student moved to study: the higher the research quality of the university attended the higher the probability he/she will not return to the province of origin (an higher university quality acts as a signal for local employees); Hence, the empirical evidence strongly supports the common belief that the most important decision of Italian graduates to influence is that of WHERE to study (ceteris paribus the most part of those who move at the first stage - and do it to study in a better university -, remains there). In fact, the higher the quality of the university supply, the lower the need to migrate to study, and to work. At the same time, better universities attract students from “ outside”, hence they contribute to accumulate human capital (and to labour productivity and growth; Becker, 1964; Lucas, 1988). Policy Implications The analysis argues strongly for the promotion of policy initiatives to improve the quality of academic institutions, and the accountability of research results. Results would suggest that systemic interventions to sustain centres of excellence in relatively less industrialized areas would be very beneficial. They would help to attract talents from “ abroad”, and to avoid losing “domestic” human capital, and potential growth. Clearly, developing centres of excellence for scientific research is a necessary but non sufficient condition to attract them as students and graduates migration choices are also influenced by the socio and economic conditions offered by the “hosting” province. Hence, framing the environment for innovation and high tech entrepreneurship can make regions attractive to both home and foreign students and young graduates. Such policies embrace promotion of entrepreneurship, training and education, mechanisms influencing the allocation of capital, public research and its links with business. There is the need, in source regions which do not receive flows of human capital (as in the case of Italian Southern regions), to develop an adequate technological, scientific and business environment that will provide satisfying opportunities for returning individuals who have upgraded their skills abroad and/or serve to persuade the students to stay. 1 st relevant moment: before enrolment 2 nd relevant moment: after graduation 2004 Southern graduates 25% moved to study to CN 75% stayed to study in the S 1 st stage: Where to study? 2 nd stage: Where to work? Southerns who graduated in the S Southerns who graduated in CN 65% stayed in CN 35% return to S 67% stayed in the S 33% moved to CN