The role of fees in foreign education: evidence from Italy.

Summary This article studies the determinants of international students’ mobility at the university level, focusing specifically on the role of tuition fees. We derive a gravity model from a Random Utility Maximization model of location choice for international students in the presence of capacity constraints of the hosting institutions. The last layer of the model is estimated using new data on student migration flows at the university level for Italy. We control for the potential endogeneity of tuition fees through a classical IV approach based on the status of the university. We obtain evidence for a robust and negative effect of fees on international student mobility, with an elasticity around −0.8. The estimations also confirm the positive impact of the quality of the education and support an important role of additional destination-specific variables such as host capacity, the expected return of education, the cost of living and the existence of education programs taught in English.