Does the presence of international students improve domestic graduations in the US?

We examine the impacts of international students on the graduation performance of universities in the states of Illinois and California, U.S.A. Using data on enrollment and graduation – disaggregated by universities, programs, and types of students – we follow two methods: a two-stage method and a one-step method. In the first stage of the two-stage method, we estimate university ‘premiums’ on graduations, and in the second stage, we examine how these premiums are affected by the graduation rates of international students. In the one-step method, we examine how international students affect the graduation of native students and of all students, separately for master's and PhD degrees, after controlling for enrollments and a number of program-specific and university-specific characteristics. In both methods, we allow for possible two-way causality. Our estimates suggest that international students generate positive externalities on the university graduation premiums among both native students and all students.