Abstract
Internationalisation is a major trend in higher education worldwide. Yet, little evidence is given on the net impact of international students on national economies. This study addresses this gap by estimating the benefits against the costs driven by international students in Belgium and its Flemish region in particular. Using a unique combination of various sources of micro-data, the results show net positive benefits that exceed costs by a factor ranging between 2.4 (lower bound) and 3.1 (upper bound) times. The results vary highly with the level of education, as the ratio is the lowest for doctoral students (1.2–1.6) and highest for master students (5.1–6.3). The effect is mainly driven by a high stay rate of international students, who are likely to work in the country after graduation. When considering indirect effects, our results show that there are no significant peer effects due to the presence of international students in the classroom.
Highlights
The number of students moving to a different country with the purpose of studying has grown steadily and represents a significant proportion of the student body in a number of Higher Education (2021) 82:459–476 countries (Knight, 2013)
Previous research focused on the empirical application, while the state-of-the-art would benefit from an extensive theoretical framework and methodological details on both the direct economic impact and the indirect effects of internationalisation (Throsby, 1991, 1998; CPB, 2012)
Two-year programme, English programme); P−ijt is a measure of the peer effect which is equivalent to the proportion of international students within programme without including the student i; φj indicates programme fixed effects to capture observed and unobserved differences at the programme level and ρt controls for time fixed effects
Summary
Higher Education (2021) 82:459–476 countries (Knight, 2013). The European Economic Area (EEA) attracts almost half (as estimated approximately 45% in 2017) of the entire number of international students (OECD, 2019a). An important element of internationalisation is the long-term effects, as measured by labour market outcomes and by the contributions given and received by international students staying in the host country after graduation. Making reference to our theoretical framework, we first compute the costs related to public spending for education by combining the yearly expenditure per tertiary student (OECD, 2018b) with the number of international students and the average duration of studies. Long-term costs are made by social expenditures incurred by the government, which are composed of (i) income support to the working-age population; (ii) family services (since five years after graduation) and (iii) pensions (since forty years after graduation) These values are kept constant over time and discounted to the average inflation rate of 1.8% (OECD, 2018b), in order to estimate their present value. The benefit-cost (BC) ratio, where the present value of benefits is divided by that of the costs, has been computed
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