The Contribution of Foreign Master's Students to Us Start-Ups

66 Pages Posted: 2 Jan 2025 Last revised: 13 Jan 2025

See all articles by Michel A. R. Beine

Michel A. R. Beine

University of Luxemburg; CESifo (Center for Economic Studies and Ifo Institute)

Giovanni Peri

University of California, Davis - Department of Economics

Morgan Raux

Aix-Marseille University - Aix-Marseille School of Economics

Date Written: December 2024

Abstract

In this paper, we estimate the effect of increasing the share of foreign-born Master graduates on the creation of innovative start-ups in the US. We combine information on international students graduating from Master's programs by university cohort with data on start-ups created in the US between 1999 and 2020 by graduates of those cohorts. To establish a causal link, we use idiosyncratic variation in out-of-state relative to in-state fees charged by universities across Master's cohorts, resulting in differential foreign students' enrollment. We also use changes in the share of foreign students predicted by a shift-share instrument, based on university-level past networks, as an additional identification strategy. For each additional ten percentage points of foreign students graduating in a Master's cohort, we find 0.4 additional start-ups in that cohort. Then, using a name-based attribution of the origin of creators of start-ups, we find that between 30 and 45% of the total start-up creation effect is attributable to a positive spillover of foreign-born on start-up founders of US origin.

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Suggested Citation

Beine, Michel A. R. and Peri, Giovanni and Raux, Morgan, The Contribution of Foreign Master's Students to Us Start-Ups (December 2024). NBER Working Paper No. w33314, Available at SSRN: https://ssrn.com/abstract=5076017

Michel A. R. Beine (Contact Author)

University of Luxemburg ( email )

L-1511 Luxembourg
Luxembourg

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Giovanni Peri

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

Morgan Raux

Aix-Marseille University - Aix-Marseille School of Economics ( email )

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