The impact of work permission policies on foreign graduation

Countries often use visa policies to attract foreign talent in the fields of science, technology, engineering, and mathematics (STEM). The Optional Practical Training (OPT) program attracts high-skilled students and prospective workers by granting a 12- month U.S. work authorization to foreign graduates of U.S. institutions. In 2008, the U.S. government extended the OPT duration to 29 months for foreign graduates of STEM programs. This thesis examines the impacts of this OPT extension policy on the number of international students graduating with a STEM degree from U.S. universities and colleges. Using data from the Integrated Postsecondary Education Data System (IPEDS), we focus on the impact at both the bachelor's and master's levels. Identifying the effects of the OPT extension on student migration is methodologically challenging due to the upward trend in the enrollment of international students, driven particularly by certain origin countries. The standard two-way fixed effects (TWFE) difference-in-differences (DD) analysis, with all non-STEM programs as our control group, shows that the OPT reform increases foreign graduation by 16% at the bachelor's level and 45% at the master's level. However, when the control group is constructed via the synthetic control method (SCM), by closely matching the characteristics of the treated programs in our sample, the two-way fixed effects regressions show that the OPT reform does not affect foreign graduation at the bachelor's level and increases it by only 29% at the master's level. We also find that the impact of the OPT reform on foreign graduation varies greatly based on program characteristics. The past networks of programs, in terms of the origin of foreign students, and their selectivity affect the size of the effect of the OPT policy, yet the local economic conditions do not. Particularly, the impact of the OPT is larger for STEM programs that attracted more students from Asia in the pre-policy period and for more selective programs.