Foreign students who stay in the United States are positively selected on observables. They tend to stay in the United States during periods of strong US economic growth and during periods of weak home country economic growth. Foreign students from higher-income countries and from recently democratized countries tend not to remain in the United States. Education and innovation may therefore be part of a virtuous cycle by which education enhances a country’s prospects for innovation and innovation makes the country more attractive for scientists and engineers.
Data from the NSF Survey of Earned Doctorates (SED), which contains information on the characteristics of all individuals receiving a PhD from a US university from 1958 forward. The data spans the period 1960–2008. SED asks individuals if they intend to stay in the United States in the year following degree completion.