This paper uses a two-country model with integrated markets for high-skilled labor to analyze the opportunities and incentives for national governments to provide higher education. Countries can di er in productivity, and education is nanced through a wage tax, so that brain drain a ects the tax base and has agglomeration e ects. As these may give rise to multiplicity of economic equilibria, we carefully take into account alternative belief structures of mobile high-skilled workers. We study unilateral possibilities for triggering or avoiding brain drain and compare education policies and migration patterns in non-cooperative political equilibria with the consequences of bilateral cooperation between countries. We thereby demonstrate that bilateral coordination tends to increase public education expenditure compared to non-cooperation. At the same time, it aims at preventing migration. This is not necessarily desirable from the point of view of a social planner who takes account of the interests of migrants.