Paying out and Crowding out? The Globalisation of Higher Education. CEP Discussion Paper No. 1299

We investigate the rapid influx of overseas students into UK higher education and the impact on the number of domestic students. Using administrative data since 1994/5, we find no evidence of crowd out of domestic undergraduate students and indications of increases in the domestic numbers of postgraduate students as overseas enrolments have grown. We interpret this as a cross-subsidisation and establish causal findings using two methods. Firstly, we use the historical share of students from a sending country attending a university department as a shift-share instrument to predict enrolment patterns. Secondly, we use a change in Chinese visa regulations and exchange rates in combination with strong subject preferences as a predictor of overseas student growth. The following are appended: (1) Additional Figures and Tables; and (2) Data Description. [This paper was produced as part of the Centre's Education & Skills Programme. The Centre for Economic Performance is financed by the Economic and Social Research Council.]