The Role of Tuition Fees in Foreign Education: Evidence from Ital

This paper studies the determinants of international students’ mobility at the uni-
versity 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 stu-
dents 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 clas-
sical IV approach based on the status of the university. We obtain evidence for a clear
and negative effect of fees on international student mobility and confirm the positive
impact of the quality of the education. The estimations also support the important role
of additional destination-specific variables such as host capacity, the expected return of
education and the cost of living in the vicinity of the university.