Higher education exports and household consumption: evidence from China

Abstract

As a result of the expansion of higher education exports, the number of international students in China increased from 44,711 in 1999 to 492,185 in 2018, with an average yearly growth rate of 14%. This paper investigates whether the export of higher education improves households’ well-being in China. Specifically, we study if there is a causal relationship between higher education exports and household consumption. Using a shift-share instrumental variable approach, we find that a one percent increase in educational exports (measured as the number of international students) increased household consumption by around 0.06%. The results indicate that growth in income/wealth is an important channel that promotes household consumption. Furthermore, we find that education exports mainly affect household developmental consumption, especially housing and education consumption. We also find that the promotion effect of education export on household consumption is not driven by tuition fees alone. Finally, a vital conclusion of our work is that education exports not only can bring more trade benefits but also can relieve the negative consequences of the low household consumption rate in China.