The Effect of Retaining High-Skilled International Graduates: Evidence from the STEM OPT Extension

• Authors: Seoyoung Kwon, Jongkwan Lee and Joan Monràs
• BSE Working Paper: 1564 | March 2026
• Keywords: Labor demand, immigration, firm dynamics, high-skilled migration
• JEL codes: F22, J31, J61, R11

High-skilled migration programs exist around the world in the hope that immigrants complement native workers, allow firms to grow, and boost innovation. We study the effect of one such program by exploiting the 2016 extension of the Optional Practical Training (OPT) program, which significantly prolonged the work authorization period for international STEM graduates. Using a synthetic difference-in-differences approach, we find that the policy successfully increased the local supply of high-skilled immigrants in exposed Commuting Zones. This local inflow stimulated firm creation and the demand for native high-skilled workers. The program might have also boosted innovation in certain sectors and startup investment, especially in Commuting Zones hosting top-ranked universities, where, overall, the effects tend to be larger.