Which mechanisms explain monetary returns to international student mobility?

Abstract

The authors develop a conceptual framework explaining monetary returns to international student mobility (ISM). Based on data from two German graduate panel surveys, they test this framework using growth curve models and OaxacaBlinder decompositions. The results indicate that ISM-experienced graduates enjoy a steeper wage growth after graduation and that they receive higher medium-term wages. This is partly attributable to their favourable self-selection. Under control of selection effects and competency gains from ISM, two mechanisms so far disregarded in the literature explain monetary returns to ISM: the steeper wage growth results from the higher likelihood of ISM-experienced graduates to increase their wage through employer changes. Linked to this, their higher likelihood of working in large and multinational companies explains their medium-term wage advantage. IntroductionIn the past decades, numerous international mobility programmes, such as ERASMUS, have been established in European higher education. Substantial public funds have been invested to this end. This has aroused both political and scientific interest in whether international student mobility (ISM) yields career-related returns for the mobile individuals. Several studies from different European countries have addressed this question and have shown that graduates who spent part of their studies abroad receive higher wages (e.g. Wiers-Jenssen and Try 2005;Messer and Wolter 2007;Teichler 2011;Rodrigues 2013). It is still unclear, however, whether this association reflects a causal effect. If so, which precisely are the causal mechanisms that explain monetary returns to ISM? 1 To answer this research question, we first need to develop a conceptual framework for analysing monetary returns to ISM. We do so by integrating different theoretical approaches that explain how ISM can result in higher wages. On the one hand, our framework incorporates two explanatory mechanisms already discussed in previous research: graduates who spent part of their studies abroad could receive higher wages not because they sojourned abroad, but due to other characteristics leading to higher wages (selection effects). They could also receive higher wages because they acquired specific wage-relevant competencies abroad (competency effects). On the other hand, our framework incorporates two further theoretically plausible, but so far largely disregarded explanatory mechanisms: ISM experience could decrease job search costs and thus increase the likelihood to change the employer and realise wage gains during this process (employer change effects). And finally, the wage advantage of ISM-experienced graduates could be explained by the signalling value of ISM, which should enable an improved access to high-paying, large and multinational companies (company structure effects). By examining these four explanatory mechanisms in an integrated conceptual framework, we wish to provide insights into whether the observed wage advantage is causally attributable to ISM or merely the res...

Study choices and returns of international students: On the role of cultural and economic capital of the family

“…Even if international education does not serve as a “distinguishing identity maker” of the middle classes at the local labour market, as expected by Findlay et al (: 128), it could be argued that nonreturning graduates from a high cultural capital background still profit from their family background, for example, by participating in the prestigious and well‐paid global labour market of multinational companies. Indeed, German analysis of the employment of foreign university graduates suggests that international student returnees are more likely to work for multinational companies (Kratz & Netz, ). A similar observation in Hong Kong is analysed by Waters ().…”

Heterogeneous effects of graduates’ international mobility on employers’ hiring intentions—experimental evidence from Germany

“…Graduates with ISM experience also select themselves into big and international companies (e.g. Kratz and Netz 2018) and into jobs with international tasks (Bracht et al 2006;Wiers-Jenssen 2008, Wiers-Jenssen 2013. As ISM experience occurs together with other characteristics of graduates or employers that are likewise crucial for the labour market success, its effects must be isolated.…”

“…In the case of graduate surveys, assumptions about employers' decision-making are often tested only indirectly (e.g. Kratz and Netz 2018). In the case of employer studies, responses to retrospective questioning may be blurred by cognitive memory processes (e.g.…”

“…Parey and Waldinger 2011), in multinational companies (e.g. Kratz and Netz 2018) and in jobs with international tasks (Bracht et al 2006;Wiers-Jenssen 2008, Wiers-Jenssen 2013. 4 Hypotheses Successful sorting and job-matching results from interactive signalling and screening processes, so that it is purposeful to consider both applicants' signals/indices and employers' needs.…”

“…Another group of studies addresses the effects of ISM experience on graduates' employment probabilities or wages more directly, but with mixed evidence (e.g. Wiers-Jenssen and Try 2005;Messer and Wolter 2007;Parey and Waldinger 2011;Teichler 2011;Støren and Wiers-Jenssen 2010;Wiers-Jenssen 2011Kratz and Netz 2018;Waibel et al 2018;Jacob et al 2019).…”