Association for Public Policy Analysis & Management

In the immigration literature, relationship between high-skilled foreigners and their effect on domestic labor market outcome is studied extensively. This study sits at the intersection of immigration and peer-effects in higher education. Specifically, I study the dynamic relationship between high-skilled foreign students and their domestic counterpart in various majors. Using an exogenous policy shock in 2008 that dramatically increased the enrollment of foreign students in STEM majors in US colleges, I look at how the changes in foreigners’ share in a major impact domestic students' outcomes in that major. I use individual-level data that shows detailed information about students’ abilities and academic records from a large research university. I also employ a Bartick instrument (aka. Shift-share IV) to enhance my identification strategy of a causal effect of foreign students on domestic outcome. The direction of the effect is unclear but may heavily depend on the grading scheme, class level, class size, departments from which students are taking classes.