Working Paper: NBER ID: w30431
Authors: Michel Beine; Giovanni Peri; Morgan Raux
Abstract: US universities have attracted hundreds of thousands of international students each year for the last decade. Some of these remain in the US after graduating and contribute to the high skilled labor supply in US labor markets. In this paper, we identify and estimate by how much one more international master’s (or bachelor’s) student increases the skilled labor supply of the US in the short-run. To estimate this "transition rate" we implement an instrumental variable estimation using quasi-random variation in the tuition charged to international students by public US universities in the year that they likely started their studies. We find that attracting an additional international student to a US university increases the local labor supply by about 0.23 employees for master’s students and about 0.11 for bachelor’s students. These averages conceal an important difference. While non-STEM bachelor’s and master’s students had negligible transition rates into US employment, STEM Master students have had significant transition rates around 0.2, especially after the 2008 reform of Optional Practical Training for STEM graduates.
Keywords: international students; skilled labor supply; U.S. economy; transition rates; OPT reform
JEL Codes: H7; I2; J6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Attracting an additional international master's student (F29) | Increases the local labor supply (J49) |
| Attracting an additional bachelor's student (M59) | Increases the local labor supply (J49) |
| Transition rates for master's graduates (J62) | Increases the local labor supply (J49) |
| Transition rates for bachelor's graduates (J62) | Increases the local labor supply (J49) |
| 2008 OPT reform (J68) | Increases transition rates for STEM master's graduates (J68) |
| STEM master's graduates (A23) | Higher transition rates than non-STEM students (I23) |