Panel Paper: Paying Out and Crowding Out? International Students In UK Higher Education

Thursday, November 8, 2012 : 4:00 PM
Chesapeake (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Richard Murphy, University of Texas, Austin

Much research on immigration examines the consequences of low-skill labour immigration on native workers. Less attention has been paid to other immigrants, such as highly-skilled and non-labour immigrants. This paper investigates how a rapid influx of Overseas Students (OS) has affected the number of places taken up by Domestic Students (DS) and Home Fee paying Students  (HFS) in UK higher education. Using administrative data for university attendance over the last 15 years we estimate a significant positive correlation between the changes in number of OS and DS/HFS at universities. This is found for undergraduates, taught postgraduates and research postgraduates, whilst controlling for university, subject and annual growth rates. These results cannot be interpreted as causal, as there are likely to be simultaneous shocks to the supply and demand for university places by OS and DS/HFS.  Therefore we use a version of the shift-share instrument that is university-subject area specific, to predict exogenous variation in the number of OS attending.  This is achieved by using the historical national shares of students from source countries in a university-subject area combined with the total national inflow from that country as an instrument for the current inflows of OS to university subject areas. This provides us with insights into how the Higher Education system in the UK responds to the additional funding provided by overseas students.