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CEP Discussion Paper
Paying Out and Crowding Out? The Globalisation of Higher Education
Stephen Machin and Richard Murphy
September 2014
Paper No' CEPDP1299:
Full Paper (pdf)

JEL Classification: I20; I21; I28

Tags: overseas students; crowding out

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.