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The Effect of Retaining High-Skilled International Graduates: Evidence from the STEM OPT Extension

Author

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  • Jongkwan Lee
  • Seoyoung Kwon
  • Joan Monràs

Abstract

High-skilled migration programs exist around the world in the hope that immigrants complement native workers, allow firms to grow, and boost innovation. We study the effect of one such program by exploiting the 2016 extension of the Optional Practical Training (OPT) program, which significantly prolonged the work authorization period for international STEM graduates. Using a synthetic difference-in-differences approach, we find that the policy successfully increased the local supply of high-skilled immigrants in exposed Commuting Zones. This local inflow stimulated firm creation and the demand for native high-skilled workers. The program might have also boosted innovation in certain sectors and startup investment, especially in Commuting Zones hosting top-ranked universities, where, overall, the effects tend to be larger.

Suggested Citation

  • Jongkwan Lee & Seoyoung Kwon & Joan Monràs, 2026. "The Effect of Retaining High-Skilled International Graduates: Evidence from the STEM OPT Extension," Working Papers 1564, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1564
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    Keywords

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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