TLS: The Causal Impact of Foreign and Domestic Doctoral Students on Knowledge Creation and Innovation in US Universities: Evidence from Enrollment Shocks

University Of Colorado At Boulder, Boulder CO

Investigators

Abstract

For various reasons, including tighter restrictions on the issuance of U.S. visas to foreign students after September 11, 2001, applications by foreign graduate students to U.S. universities have fallen. This empirical study, based on micro datasets, evaluates one potentially important economic consequence of this policy: the decrease in high-quality foreign graduate students in U.S. academic institutions. This may adversely affect knowledge and innovation produced in science and engineering departments, thereby affecting long-run U.S. leadership in science and engineering and in scientific innovation and knowledge creation. Thus, it is important to develop careful statistical evidence on this possibility. Using confidential micro-data on all Ph.D. recipients at U.S. universities from 1960-2004, this project creates measures of enrollments in doctoral programs, broken down by national origins of students, field and dates of study, and university and academic department of enrollment. These measures are then combined with data on knowledge and innovation outputs attributable to specific academic departments, including patents, patent citations, research publications and citations, to study whether foreign and domestic graduate students in science and engineering fields contribute to knowledge creation and commercial innovation. The empirical identification strategy exploits variation in economic characteristics and policy in source countries that led to exogenous changes in the potential supply of foreign graduate students for reasons unrelated to U.S. innovation. Of particular interest is the extent to which domestic and international students are substitutes in the production of knowledge and innovation. A dynamic model of matching between foreign and domestic graduate students with universities and fields of study are simulated with appropriate basic parameters, and then subjected to various shocks (such as changes in wage opportunities for students). These simulations are used to interpret the econometric results and also to evaluate the likely impacts of alternative policies regarding student-visa restrictions. A major concern about declining foreign applications is the potential reduction in the research capacities of American universities and the consequent loss of innovation in the broader economy. This analysis should inform policymakers about whether this concern is warranted and the extent to which reductions in innovation over time are anticipated. It also has the potential to inform federal policy priorities regarding visas and subsidies for research, including grant programs. The project evaluates the innovation impacts of alternative visa restriction policies including a policy that favors higher-quality foreign students versus the current policy that puts some weight on the financial status of applicants. The research can also offer guidance on the potential benefits of accelerated tracks toward permanent residency. American research universities are increasingly reliant on federal grants and licensing income to support their research programs. This analysis offers strong evidence of the productivity of foreign and domestic graduate students in generating knowledge that supports such revenues. Thus, the results should be informative about the returns generated by investments in universities for grants and graduate training in science and engineering. Further, this research will generate a significant new database linking micro-data on enrollments with measures of knowledge creation and innovation by universities and spillovers into the broader commercial sector. The database should be immediately valuable for (a) future research on knowledge creation in specific fields, (b) management studies of research organization in university settings, and (c) research on grant evaluation.