International Student Mobility and Household Consumption: Evidence from China

Abstract

As a result of the expansion of exports of higher education, the number of international students in China showed an average yearly growth rate of 23% between 2004 and 2018. This paper investigates whether the export of higher education improves household’s wellbeing in China. Specifically, we study if there is a causal relationship between the exports of higher education and household consumption. We combine province-level data of the number of international students with the information from the Family Panel Studies (CFPS) survey. Using a shift-share instrumental variable approach, we find that a one percent increase in educational exports (measured as the number of international students) increased household consumption in around 0,06%. The results indicate that growth in income/wealth is an important channel that promotes household consumption. Furthermore, we find education exports mainly affect household developmental consumption, especially for housing and education consumption. We also find that implementing incentive policies will not reduce the promotion effect of education export on household consumption. Finally, a vital conclusion of our work is that education exports not only can bring more trade benefits but also can relieve the negative consequences of the low household consumption rate in China.