Attracting overseas students can serve as a policy to increase the future inflow of highly talented workers. That is the implication of research published in the March 2011 issue of the Economic Journal, which investigates the effect of studying abroad on students'' likelihood of working abroad after obtaining their university degree.
The study by Matthias Parey and Fabian Waldinger examines the impact of Erasmus, a student exchange programme introduced by the European Union in 1987, in which more than two million students have participated, including about 180,000 from the UK. The results indicate that graduates who have studied abroad are 15 percentage points more likely to work abroad after graduation.
The authors also provide evidence on why students who have studied abroad are more likely to work abroad later on. While studying abroad seems to increase labour market skills that are in demand in the foreign country, other ''softer'' factors are also affected. Studying abroad raises students'' interest in foreign cultures and introduces them to people in the foreign country. Some even return to the foreign country for work purposes because they met their partner while studying abroad.
The researchers note that the number of students studying abroad has risen dramatically in recent decades. Numerous countries, including the United States, Japan and the UK, attempt to attract highly skilled and mobile workers through policies relating to student mobility programmes. But until now, little has been known about the effectiveness of such programmes.
The analysis in this study is based on a large-scale survey of university students graduating from German universities between 1989 and 2005. The research links details of the students'' university experience and information about their early labour market to their exposure to the Erasmus programme. In the Erasmus programme, students receive a grant and can access a network of partner universities, which reduces both the direct cost as well as the bureaucratic hurdles of applying for study abroad spells.
The study finds that the introduction of the Erasmus programme significantly increased the probability of students spending some time at a foreign university. Looking at the effect on international labour market mobility later in life, the findings indicate that studying abroad significantly increases the likelihood of working abroad after obtaining a university degree.
The study finds that location choices are ''sticky'' – that is, students tend to return to work where they have studied abroad. This suggests that contacts and language skills are important factors driving the decision to work in a foreign country.
These findings suggest that mobility decisions during university have long-run effects on the careers and labour market outcomes of individuals. In particular, mobility during the course of individuals'' studies increases their international mobility in the labour market. This highlights the importance of student mobility to attract highly skilled workers to a country.
''Studying Abroad and the Effect on International Labour Market Mobility: Evidence from the Introduction of ERASMUS'' by Matthias Parey and Fabian Waldinger is published in the March 2011 issue of the Economic Journal.