What Does Growth of Higher Education Overseas Mean to the US? Richard B. Freeman, Harvard and NBER Part I: Facts 1. Worldwide Growth of Higher Education 2. International Students 3. Advanced country feminization of Higher Education Part II: Interpretation 4. Models of University Sector Expansion 5. Implications for universities, students, firms 6. Policies to make worldwide growth more beneficial to the US

I. Facts

Three “Big Facts” about the Growth 1.The US share of world higher education enrollments and degrees, particularly in science and engineering, is falling at undergraduate and graduate level, due to increased propensity for higher education in other countries and “human resource leapfrogging” in highly populous developing countries. 2.The US share of the international students is falling while the international share of US graduate studies, is rising; and foreign-educated graduates are an increasingly important source of labor in US and for US multinationals worldwide. 3.Women have become the majority of university students throughout the advanced world, and thus an increasingly important source of highly educated workers worldwide.

1: Millions of Enrollments in Higher Education (including < 4 year) Worldwide and US Share of World Enrollments World US Other advanced Developing China < India US share29%22%20%13%

US Rank in Propensity for University Training vs Other Advanced countries Graduation Data from OECD for advanced countries “tertiary A” graduation rates out of 15 “tertiary A” graduation rates out of 20 Phd or equivalent graduation rates out of 20 All Science Grads/ yr olds, out of 20 Enrollment data from OECD for advanced countries first time entry as % of age group out of 15 first time entry as % of age group out of 20 Enrollment % of yr olds out of 20 Enrollment % of yr olds out of 20 Survival Rates from OECD for advanced countries Graduation/new entrants for type A t out of 18

US Rank in Propensity for Bachelor’s Degrees and Natural Science and Engineering Degrees (NSF) Bachelor’s Grads/24 yr old pop, of 21 advanced countries of 23 advanced countries Natural Science &Engineering Grads /24 yr of 21 advanced countries of 23 advanced countries

Millions of First University Degrees, Natural S&E Degrees, 24 year olds, ~2002 and ~1995 US 2002 World 2002 US/World 2002 US/Asia- Eur-NA, 2002 US/Asia- Eur-NA, 1995 First Degree %17.0%22.5% Nat S&E %9.9%12.8% 24 yr old %6.1%5.5% First/24 yr old 33.9%11.4% Nat S&E /24 yr 5.7%3.0%

a 2010 a Asia major nations Chinana Japan EU major (Fr, Germ, UK) All EU c 1.92 c Chinese ‘diaspora’ vs. US ‘stayers’ (estimate) 0.72 b a For 2003 & 2010, ratios calculated using US doctorates at 2001 production level. b ‘diaspora’ includes estimates of Chinese doctoral graduates from UK, Japan, and US (with temporary visas). US ‘stayers’ include US citizens and permanent residents c EU data extrapolated from earlier years. Sources: Science & Engineering Indicators – 2004 (NSF), and primary sources referenced therein; Weigo & Zhaohui National Research Center for S&T Development (China) – private communication Ratio of #S&E PhDs from Foreign Universities to # from US Universities

2. Millions of International Students and US share, Year NumbersUS Share % % % % % Source: OECD, Education at a Glance, 2007, Box c3.1 and IIE, International Students and Mobility

Foreign-Born share of US degrees and enrollments /3 Bachelor’s Natural S &E Master’s Natural S&E Doctorate Natural S&E All S&E Postdocs Grad Student enrolments Natural S&E All S&E

Major sending countries in International Graduate Students, by location

Do foreign “crowd out” US-born? In aggregate, hard to see in data since US system is highly elastic to enrollments Most growth of FB enrollments in newer, lower quality graduate programs But US-born share in top universities in many fields has fallen. Any adverse impact on decisions of US students more likely through job market effect of immigrants or off shoring

3. The Surge of Female Enrollments, A US Comparative Advantage?

Ratio of Females to Males in US higher education, enrollments and by degree, 2004 College Enrolments1.29 Bachelor’s1.37 Master’s1.43 Law0.98 MD 0.87 MBA0.72 PhD0.92

Enrollment Ratios of Women/Men in higher education, by age group, advanced countries, 2004 OECD UN

The Rapidly Growing US Supply to S&E: % of NSF Fellowships Awarded to Women,

II. Interpretation

4. Models of growth process Logistic growth patterns in growth of enrollments, lagging logistic growth of HSG Growth of foreign-born grad students in US depends largely on growth of bachelor’s grads in other country Growth of foreign-born post-docs depends largely on NIH spending; 2/3rd are from foreign universities ?? Field patterns differ depending on role of state in admissions ?? ?? Cost of higher education affects global differences in enrollments ??

5. Implications: Macro-economy Growth of college grad workers  Growth of knowledge  faster productivity growth  lower priced goods good for humanity. Lower cost of goods with low wage college graduates elsewhere Great for US/other multinationals, who source labor globally But some adverse effects on US: Reduced US comparative advantage in high tech/other college intensive sectors; loss of dominance in military technology

Implications: US universities Wider pool of applicants with same distribution of abilities as US –> better selection of students. Competition from foreign universities for top US/ international students … sometime in the future. Branching overseas? Make immigrant status easier for overseas students? Fuel expansion of lower quality US institutions, but greater supply of PhDs  improved quality Exploiting the big edge – quality “brand” with graduates in key positions in other countries

Implications: US students Wider pool of applicants with same distribution as US –> greater supply competition for slots in top US institutions … mostly at graduate level Improved quality of universities overseas will offer new educational opportunities for US students … sometime in future

Implication: job market for US graduates Ratio of applicants to jobs for “best” places will rise. If randomly hire observationally equivalent, chances for US person fall. Expect to see higher share of foreign-born and foreign- trained US graduates and foreign graduates in US multinationals Expansion of modern technology/globalization will offer new job chances overseas Should universities act more as agent of graduates in setting policies that affect their labor market?

6. Conclusion US cannot compete in quantity. So must find quality niches. US advantages – close link to business; universities as entrepreneurial institutions; first mover edge Openness to accept and build on foreign-created knowledge. The Question for US: Can country maintain leadership in science, technology, culture broadly defined by building on its “first mover” advantage to be the spoke of networks linking US and foreign scholars and sourcing students and faculty worldwide as share of higher education falls?

University President Salaries Soar Into the Millions By Michael Janofsky THE NEW YORK TIMES