Whither Students Flock, Others Will Follow

Foreign students can be so many things at once. One man's brain drain, another man's brain gain. Cash cows for high-brow, cash-strapped universities. Cultural ambassadors of sorts, and contributors to student diversity. Welcome injections of fresh talent in certain trades. And, reportedly, harbingers of migration to come.

Foreign students are not a scarce commodity: they made up over 5 per cent of students in the OECD in 2002 – a fraction that rises substantially at the higher-education level. The fact that some of them may choose to stay to work as skilled workers strikes some host countries as a desirable development, others as something to be wary of.

But do they actually stay on? And if so, do they eventually bring along their aunts, uncles, mothers and sons? In other words, what is the effect of student flows on immigration? Given the spotlight on immigration to OECD countries this is not a trivial question, which nonetheless has remained unexplored. That is, until the latest CESifo Working Paper by Axel Dreher from the University of Constance and Panu Poutvaara from the University of Helsinki, in which they shed light on the matter.

They posit that a large flow of foreign students is likely to exert a positive influence on immigration —both because foreign students are likely to stay on, and because they are likely to encourage further immigration from their home countries. In addition, they correct for a number of other potential “push” and “pull” factors that may influence immigration. For example, coming from a relatively poor country is likely to be a “push” factor; this is corrected for by including the ratio of GDP per capita in the origin and destination countries. Similarly, the existence of a large immigrant community in the potential country of destination is likely to ease the process of assimilation there and therefore acts as a “pull” factor; this is accounted for by correcting for the ratio of the destination country’s immigrant stock to native population.

As it turns out, in their sample of OECD countries, foreign student flows are an important determinant of immigration: a one percent increase in student flows is associated with about a half percent increase in immigration. In addition, migration flows are larger to countries which are wealthier relative to origin countries, and which already have relatively high immigrant concentrations.

The importance of foreign student flows in explaining general immigrant flows is confirmed in a richer data set (which allows a number of robustness checks) pertaining solely to the United States. In that data Dreher and Poutvaara find that a ten percent increase in student flows leads to a 0.3-0.9 per cent increase in immigration. Indeed, in a number of alternative specifications, student flows turn out to be a more consistent contributor to immigrant flows than more traditional explanations, such as GDP per capita ratios.

What Dreher and Poutvaara’s data suggest, therefore, is that OECD countries should not live under the illusion that foreign students are here today and gone tomorrow. Many are likely to stay and even encourage more immigration from whence they came. For those few countries which want to discourage immigration, then, foreign students threaten to be a hornet’s nest. However, for the vast majority of OECD countries that want to encourage immigration, and skilled immigration at that, universities should probably crack their doors a little wider to foreign students.

Axel Dreher and Panu Poutvaara: Student Flows and Migration: An Empirical Analysis, CESifo Working Paper No.1490

• Other CESifo Working Papers dealing with migration
• Other CESifo Working Papers by Panu Poutvaara
• CESifo Working Papers published in the past three months