The Value of U.S. College Education in Global Labor Markets: Experimental Evidence from China

Abstract

One million international students study in the U.S. each year and the majority of them compete in global labor markets after graduation. I conduct a large-scale field experiment to study how employers in China value U.S. college education. I sent over 27,000 fictitious online applications to business and computer science jobs in China, randomizing the country of college education. I find that U.S.-educated applicants are on average 18 percent less likely to receive a callback than applicants educated in China, with applicants from very selective U.S. institutions underperforming those from the least selective Chinese institutions. The U.S.-China callback gap is smaller at high-wage jobs, consistent with employers fearing U.S.-educated applicants have better outside options and will be harder to hire and retain. The gap is also smaller at foreign-owned firms, consistent with Chinese-owned firms knowing less about American education. Controlling for high school quality, test scores, or U.S. work experiences does not attenuate the gap, suggesting that it is not driven by employer perceptions of negative selection. A companion employer survey of 260 hiring managers finds consistent and additional supporting evidence for the experimental findings.