Student and Graduate Migration and its Effect on the Financing of Higher Education

The number of international students worldwide has almost doubled in the last decade. In higher education systems that are partly tax-funded, a country’s labour force might not be willing to subsidize the education of international students who might move away after graduation. This paper analyses how student migration affects governmental decisions regarding the financing of higher education for 22 OECD countries for the period of 2000 to 2011. Based on fixed effects estimations, we find a significant positive correlation between the share of international students and the private funding share for higher education. This result is robust to changes in the specification, including estimations for country groups and for an expanded lag structure. The use of an instrumental variable approach supports a causal interpretation.