The local economic impact of international students: Evidence from US commuting zones

This paper examines the impact of international students on local labor markets and establishments in the United States. Identification rests on a shift-share instrumental variable strategy that exploits supply-driven changes in foreign enrollment in non-US destinations. I find that one additional international student per thousand working-age residents increases the employment-to-population ratio by 0.19 percentage points and average hourly wages by 0.48 percent. Increases in foreign enrollment also lead to substantial labor reallocations toward potentially more productive establishments, particularly within non-tradable industries. Heterogeneity analyses suggest that these effects are primarily driven by demand-side factors related to student spending, while labor supply contributions from student employment play a limited role. Overall, these findings point to sizable economic benefits linked to foreign student inflows through increased local income and business dynamism, and suggest that rising trade tensions and restrictive immigration policies may impose substantial costs by slowing or reversing recent enrollment trends.