Which mechanisms explain monetary returns to international student mobility?

Abstract

The authors develop a conceptual framework explaining monetary returns to international student mobility (ISM). Based on data from two German graduate panel surveys, they test this framework using growth curve models and Oaxaca–Blinder decompositions. The results indicate that ISM-experienced graduates enjoy a steeper wage growth after graduation and that they receive higher medium-term wages. This is partly attributable to their favourable self-selection. Under control of selection effects and competency gains from ISM, two mechanisms so far disregarded in the literature explain monetary returns to ISM: the steeper wage growth results from the higher likelihood of ISM-experienced graduates to increase their wage through employer changes. Linked to this, their higher likelihood of working in large and multinational companies explains their medium-term wage advantage.

Keywords:

• international student mobility
• study abroad
• labour market outcomes
• migration
• growth curve analysis
• Oaxaca–Blinder decomposition

Acknowledgements

We thank Martin Abraham, Jan Ballowitz, Kolja Briedis, Josef Brüderl, Gregor Fabian, Markus Lörz, Volker Ludwig, and Tobias Wolbring for valuable comments on earlier versions of this article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Ethics statement

Participation in the DZHW Graduate Panel and in the Bavarian Graduate Panel was voluntary, and participants' confidentiality was protected. The data published in this article were collected in line with German data protection laws and do not allow for deductive disclosure of respondents' identities.

Notes

1 In line with European education policy, this paper focuses on shorter phases of study-related mobility across national borders, also called credit mobility or study abroad. This type of mobility is usually distinguished conceptually from mobility for the sake of completing an entire degree abroad. For our main analyses, we use a definition of ISM comprising periods of enrolment, internships, language courses, and other study-related stays abroad (e.g. summer schools), but we also present sensitivity analyses on returns to ISM by different types of mobility.

2 Further information on the analysed data sources is available online (DZHW Graduate Panel: http://www.dzhw.eu/projekte/pr_show?pr_id=467; Bavarian Graduate Panel: http://www.bap.ihf.bayern.de/). The DZHW data are publicly accessible through a standardised procedure for external data use.

3 Using the logarithm, we can interpret expected changes in the dependent variable associated with one-unit increases in the independent variables as percentage changes. Halvorsen and Palmquist (1980) warned that coefficients of dummy variables can be biased in semilogarithmic regressions. As a robustness check, we therefore also estimated all ISM wage gaps using their procedure for coefficient adjustment. This leads to slightly higher estimated ISM wage gaps (gross effects of 8% in the DZHW data and of 15.5% in the BAP data), which means that the effects presented in the main text are conservative and thus robust.

4 To further reduce the possibility of selection bias, our multivariate wage growth models additionally include dummies for the higher education institutions that graduates attended and interactions of these variables with labour market experience.

5 We performed all statistical analyses using Stata software. To estimate the RE and FE growth curve models, we used the Stata commands ‘xtreg, re’ and ‘xtreg, fe’. For researchers who wish to reproduce our results, the corresponding Stata syntax is available upon request.

6 Some graduates who went abroad for an enrolment or an internship additionally completed, for instance, a language course or a summer school abroad. We included these graduates to not lose too many cases with the treatments we are interested in (enrolment and internship abroad).