International Student Inflow and City Innovation: Evidence from China

Research on immigration and innovation points out that immigrants can directly enhance the innovation of the host country by promoting cultural diversity. This paper analyzes the theoretical mechanism of international student inflow on city innovation from the perspective of cultural diversity and identifies the causal effect by constructing the instrumental variable of shift-share IV. The results show that the international student inflow has a significant positive effect on city innovation. This effect is non-linear and the threshold regression model identified the two threshold values. Further considering the spatial spillover effect between cities, we find that the innovation capacity and efficiency of cities are affected by local-related factors and the spillover effects of neighboring cities. The direct effect of international talent is positive, while its spillover effect is negative, which indicates a competitive effect between cities in attracting international students.