Population loss and economic decline hurt Puerto Rico’s pharma industry.

Economic decline and a subsequent population downturn are often tied to the loss of key industries. The repeal of section 936 of the IRS code, which exempted multinational corporations from paying U.S. corporate income tax on profits from operations on the island, had a negative impact on employment and caused workers to look elsewhere for work. While Puerto Rico’s population has been declining for decades, the economic losses in manufacturing accelerated this trend. Unemployment in Puerto Rico is highest among the least educated, and they would be apt to benefit from emigrating to the U.S. mainland where jobs are more plentiful; however, people with at least a high school diploma are more likely to have the means to relocate to the U.S. mainland. To determine whether Puerto Rico has suffered a loss of intellectual capital, Able and Deitz measured the annual net migration of each of the following educational attainment groups: less than high school, high school graduate, some college, and college graduate. The authors calculated the net change as the number of immigrants less the number of emigrants. Although Puerto Rico has a net loss of citizens across all groups, the share of college-educated emigrants has fallen below the proportion of college-educated people in the general population. So although a brain drain has occurred and is of some concern, the emigration rate of less educated Puerto Ricans has exceeded that of the more educated population, and the net migration pattern shows that people with higher levels of educational attainment are less vulnerable to the economic forces driving Puerto Rico’s demographic losses. The authors note that 17 American states have experienced post-World War II population losses like that of Puerto Rico in that they lasted at least 5 years. These losses are usually tied to economic declines in key industries, such as the coal or steel industries. In Puerto Rico’s case, the pharmaceutical manufacturing industry was hard hit by the removal of tax advantages.