NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Global Expansion of Higher Education


While foreign-born scientists and engineers who remain in the United States contribute to U.S. economic growth, they also reduce the payoff for investing in higher education in science and technology for those born in the United States.

In 1970, approximately 29 percent of the world’s college students attended school in the United States, even though the United States accounted for only 6 percent of the world’s population. Over the last four decades, higher education in the rest of the world has expanded rapidly, so that in 2005-6 the U.S. share of the world’s college students had dropped to 12 percent. From 1995-2004, the U.S. share of bachelor’s degrees in all fields fell by 5.5 percent and the share in natural science and engineering declined by 1.3 percent.

In 1966, 23 percent of science and engineering PhDs awarded by U.S. universities went to students who were born outside the United States. By 2006, that proportion had increased to 48 percent. In 2004, the European Union granted 78 percent more science and engineering PhDs than the United States. By 2010, China is expected to graduate more science and engineering doctorates than the United States.

In What Does Global Expansion of Higher Education Mean for the U.S.? (NBER Working Paper No. 14962), author Richard Freeman observes that the foreign-born are “an important source of immigrant scientists and engineers” in the United States. Historically, about 75 percent of foreign-born doctoral recipients have pursued post-doctoral employment in the United States. This highlights the United States’s reliance on immigration to maintain its lead position in science and technology. While foreign-born scientists and engineers who remain in the United States contribute to U.S. economic growth, they also reduce the payoff for investing in higher education in science and technology for those born in the United States.

In the short-term, the growing number of college students in other countries increases the demand for places in U.S. graduate and professional schools. If U.S. graduate schools admit applicants without regard for their country of origin, and available places in graduate schools grow more slowly than demand, then the proportion of U.S. students admitted to U.S. graduate programs is likely to decline in future years. In the longer term, rising quality at foreign universities will increase the competition for U.S. universities that are seeking to attract the most talented students, regardless of their country of origin.

Freeman concludes that the worldwide increase in the number of highly educated engineering and science workers will raise productivity in countries outside the United States, accelerating worldwide technological and economic progress but eroding the comparative advantage of the United States in the R and D that produces innovative products. Over the long term, Freeman predicts that the prices paid for U.S. exports in high tech and other knowledge-intensive sectors will decline.

Although U.S. consumers of high tech and knowledge intensive goods will benefit from lower prices, the United States also may "lose its position as the major producer of high tech goods or of the research and development on which they are based" to countries with highly educated workers and lower labor costs. Freeman concludes that since "most of the rest of the world is in catch-up mode in mass higher education, the decline in the U.S. advantage in the proportion of the population with university training is likely to continue for some time."

-- Linda Gorman


The Digest is not copyrighted and may be reproduced freely with appropriate attribution of source.
 
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