What Does Growth of Higher Education Overseas Mean to the US?

Richard B. Freeman, Harvard and NBER

Part I: Facts1. Worldwide Growth of Higher Education2. International Students3. Advanced country feminization of Higher Education

Part II: Interpretation4. Models of University Sector Expansion5. Implications for universities, students, firms6. 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

1970 1980 1990 2005

World 29.4 55.3 67.6 135.9

US 8.5 12.1 13.7 17.3

Other advanced

4.9 8.2 12.9 21.4

Developing 16.0 35.0 41.0 97.2

China <0.1 1.7 3.8 21.3

India 2.5 3.5 5.0 11.8

US share 29% 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 1992 2 out of 15“tertiary A” graduation rates 2005 13 out of 20

Phd or equivalent graduation rates 2005 9 out of 20 All Science Grads/ 25-34 yr olds, 2005 12 out of 20

Enrollment data from OECD for advanced countriesfirst time entry as % of age group 1995 2 out of 15first time entry as % of age group 2005 7 out of 20Enrollment % of 20-29 yr olds 1995 9 out of 20 Enrollment % of 20-29 yr olds 2005 12 out of 20

Survival Rates from OECD for advanced countriesGraduation/new entrants for type A 2004 17t 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,

1992 2 of 21 advanced countries

2002 14 of 23 advanced countries

Natural Science &Engineering Grads /24 yr

1992 3 of 21 advanced countries

2002 19 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

1.306 9.057 14.4% 17.0% 22.5%

Nat S&E 0.219 2.395 9.1% 9.9% 12.8%

24 yr old 3.851 79.363 4.9% 6.1% 5.5%

First/24 yr old

33.9% 11.4% 2.97 2.79 4.09

Nat S&E /24 yr

5.7% 3.0% 1.90 1.62 2.33

1975 1989 2001 2003a 2010a

Asia major nations 0.22 0.48 0.96

China na 0.05 0.32 0.49 1.26

Japan 0.11 0.16 0.29

EU major (Fr, Germ, UK) 0.64 0.84 1.07

All EU 0.93 1.22 1.54 1.62c 1.92c

Chinese ‘diaspora’ vs. US ‘stayers’ (estimate)

0.72b

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 residentsc 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, 1975-2005

Year Numbers US Share

1975 0.61980 0.81985 0.9 38%1990 1.2 33%1995 1.3 35%

2000 1.9 26%2005 2.7 22%

• Source: OECD, Education at a Glance, 2007, Box c3.1 and • IIE, International Students and Mobility

http://exchanges.state.gov/universitysummit/mobility_report.pdf

Foreign-Born share of US degrees and enrollments

1985 2002/3Bachelor’s 3.0 3.1

Natural S &E 6.5 6.8

Master’s 9.4 13.2Natural S&E 22.8 36.4

Doctorate 14.5 21.4Natural S&E 22.4 37.5All S&E 18.3 32.2

Postdocs 39.6 57.7

Grad Student enrolmentsNatural S&E 21.3 31.7All S&E 18.7 27.2

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?

0

0.2

0.4

0.6

0.8

1

1.2

1.4

F/M HSG Enr in College F/M HSG Enr Rate in College

F/M all College Enrollments

Ratio of Females to Males in US higher education, enrollments and by degree, 2004

College Enrolments 1.29Bachelor’s 1.37Master’s 1.43Law 0.98MD 0.87MBA 0.72PhD 0.92

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

2004

Norway 1.54 1.38 Belgium 1.21 1.06 Iceland 1.78 1.82 Austria 1.19 1.24 Australia 1.23 1.14 Denmark 1.42 1.58 Ireland 1.28 1.28 France 1.28 1.47* Sweden 1.55 1.47 Italy 1.34 1.27 Canada 1.36 -- UK 1.37 1.17 * US 1.39 1.27 Spain 1.22 1.41 Netherlands 1.08 1.17 NZ 1.41 1.41 Finland 1.20 1.26 Israel 1.33 -- Luxembourg 1.18 -- Greece 1.17 1.23 Portugal 1.32 -- Germany .. 0.97 Japan 0.89 0.73 Switzerland 0.80 0.97 Korea, 0.61 0.87

OECD UN OECD UN

The Rapidly Growing US Supply to S&E: % of NSF Fellowships Awarded to Women, 1952-2004

0%

10%

20%

30%

40%

50%

60%

70%

1950 1960 1970 1980 1990 2000

All FieldsComp SciEngineerLife SciPhys SciSocial/Psych

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 goodsgood 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 universitiesWider 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, butgreater 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 edgeOpenness 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 MillionsBy Michael Janofsky THE NEW YORK TIMES