Sarah H. Wright at NBER Digest: The Internationalization of US Graduate Education, a summary of a paper by John Bound, Sarah Turner, and Patrick Walsh.
While there is no direct evidence of [US citizens getting "crowded out" by the increasing number of foreign grad students from] doctoral programs, the influx of foreigners into the science and engineering labor market in the United States has changed the return to investment in advanced degrees in science and engineering for U.S. residents. Bound, Turner, and Walsh suggest that these effects explain why domestic demand for programs in science and engineering has remained stagnant or declined in the period of increasing foreign demand. Over the last quarter century, the relative returns to U.S. students from advanced study in the sciences have not increased. Labor market data show that the earnings of new advanced degree recipients in science-and-engineering fields trail earnings for other college-educated workers. At U.S. universities, the extended duration of low-wage post-doctorate appointments has lengthened the time between entry and completion of graduate school; the salary gap between senior and junior faculty has widened; and permanent university employment is uncertain.