International Student Inflow and City Innovation: Evidence from China

Abstract

Research on immigration and innovation points out that immigrants can directly enhance the destination's innovation capacity and generate innovation effects by promoting cultural diversity in the host country. This paper combines province-level data of the number of international students with 284 cities panel data from 2001 to 2015 and finds that international student inflow has a significant positive effect on the city innovation index. Due to the innovation effect of cultural diversity has certain transaction costs, international students' influence on the city's innovation ability is non-linear; choosing the share of undergraduate students in the total population as the threshold variable and finding the threshold value is 4.3716%. Furthermore, using the dialect diversity index as a proxy variable for cultural diversity, I find that reducing the negative impact of dialect diversity on city innovation is vital for international students to promote city innovation. Considering the possible endogenous problems and missing variables, I apply a shift-share instrumental variable approach and take a series of robustness checks; the conclusions are still robust.