Studying abroad and the effect on international labour market mobility: evidence from the introduction of ERASMUS

We investigate the effect of studying abroad on international labour market mobility later in life for university graduates. We exploit the introduction and expansion of the European ERASMUS student exchange programme as an instrument for studying abroad. We find that studying abroad increases an individual's probability of working in a foreign country by about 15 percentage points. We investigate heterogeneity in returns according to parental education and the student's financial situation. Furthermore, we suggest mechanisms through which the effect of studying abroad may operate.