Does studying abroad influence graduates’ wages?

Abstract

We review quantitative studies that empirically examine whether studying abroad influences graduates’ wages. After describing features of the existing studies, we assess existing evidence on the size of the wage effect of studying abroad. We then examine corresponding effect heterogeneities, before discussing mechanisms mediating the effect of studying abroad on wages. We conclude by highlighting directions for future research. In a nutshell, our review suggests that studying abroad has a moderate positive effect on graduates’ early career wages in various national and institutional settings. However, this effect tends to vary across groups of graduates, employment contexts, and types of stays abroad. An increased likelihood of employer change and of gaining access to large and multinational companies as well as improved access to high-wage labor markets abroad appear to be the empirically most relevant mechanisms mediating the effect of studying abroad on wages. Other assumed explanatory mechansims, such as improved language skills and a greater tendency to pursue further education, turn out to be less relevant. On balance, our review illustrates that the examined research field has made great progress in recent years. It also shows how research can be further advanced by a stronger degree of standardization of study designs, internationally comparative and longitudinal datasets, the analysis of further plausible mediating mechansism, and a focus on new research questions.