Econ Seminar: Murat Demirci (Koç University)

The number of undergraduate students from abroad at U.S. colleges and universities nearly doubled between 2005 and 2015, with the presence of foreign students being uneven across institutions and majors. In this study, we analyze how the flow of foreign undergraduate students to the U.S. impacts domestic students’ field of study. We answer this question by analyzing the data on the number of degrees granted to domestic students and temporary residents over the 2012-2018 period. To address the potential endogeneity issue, we adopt a shift-share instrument based on the enrollment patterns of foreign students observed in administrative data about student visas. Our estimates provide limited evidence for crowding out. In contrast, the number of degrees granted to domestic students increases with the increasing flows of foreign students, particularly in business programs. This result suggests that the admission of foreign students generates supply side accommodations, such as hiring new faculty members or raising faculty salaries. Our analysis of these supply side outcomes supports this claim. Finding no decline in the number of degrees granted to overall domestic students conceals heterogeneous effects detected across race groups. For instance, our results show that the number of degrees granted to white students declines in science and engineering programs admitting a larger number of foreign students.