The spread of study-abroad programs may be all well and good, but is there any hard evidence that they do anything to promote post-graduation mobility in the international labor market? Until recently, according to economists Matthias Parey and Fabian Waldinger, little was known about the effectiveness of many countries’ expensive efforts to use student-mobility programs to attract foreign workers with valuable skills. Now, however, the two academics — who teach at the University of Essex and the University of Warwick respectively — have shown that studying in a foreign country is an important route to working abroad later.
In a new paper in The Economic Journal, summarized in this short piece on VoxEU, Parey and Waldinger acknowledge the difficulties of establishing a causal link between study abroad and labor market outcomes later in life. “Students who decide to study abroad are in many ways systematically different from students who undertake all of their education in their home country,” they write. In other words – I surmise – students who study abroad are more likely to come from backgrounds (affluent homes, well-educated parents) that are also associated with a higher-than-average interest in working in a foreign country later in life. That means it’s hard to tell whether the former activity influenced the latter.
The authors attempt to isolate the effects of studying abroad by examining the ERASMUS student exchange program, which was introduced by the European Union in 1987. ERASMUS gives participating students a grant to study in a network of participating foreign universities, reducing the hassle often associated with study abroad. Looking at five cohorts of German university students graduating from 1989 to 2005, Parey and Waldinger found that students who started college just after ERASMUS became available in their departments were considerably more likely to study abroad during their undergraduate years. Looking at later work patterns, the authors came up with this bottom line: “Graduates who have studied abroad are about 15 percentage points more likely to work abroad after graduation.”
Perhaps unsurprisingly, Parey and Waldinger found in surveys that graduates who have worked abroad tended to work in the places where they studied. International study “seems to increase labor-market skills that are demanded in the foreign country,” they report. But there are also “softer” factors in play when deciding to work in a foreign country. These might include former exchange students’ heightened interest in foreign cultures, as well as their interest in returning to the home country of the romantic partners they met while studying abroad.
The findings of Parey and Waldinger’s paper are a useful reminder that a world of academic mobility goes hand in hand with talent mobility in the labor market. With nation after nation putting a premium on highly skilled workers, there’s good reason to believe that doing more to welcome foreign students will do more to bring in valuable talent over the long term.