Association for Public Policy Analysis & Management

The number of international students in the global market has been expanding in recent years from around 2 million in 2000 to over 5 million in 2016. This group contributes tuition revenue, market demand, and potential high-skilled labor to host societies, which makes them well sought-after by many host countries. However, it is unclear how the larger pool of international students affects domestic students. This paper explores post-graduation visa policies in top international student host countries and examines the effect of a more restrictive policy change in the U.K. in 2012 on domestic students college completion in the U.S. Using administrative data of all international students in the U.S. from 2001 to 2015 and an instrumented difference-in-differences identification strategy, I find that the U.K. policy change increases new international student enrollment in STEM Master's degree programs in the U.S., which increases domestic student STEM completion. This is potentially driven by cross-subsidization where international students in STEM programs bring in more tuition revenue after the policy change, resulting in more financial resources available for supporting domestic students.