By Jeremy L. Neufeld

The full paper is available here.

Executive Summary

Since the 1950s, international students studying in the United States have had the opportunity to stay in the country on their student visas after their graduation for a limited time in a program called Optional Practical Training (OPT), gaining valuable on-the-job experience and the chance to transition onto longer-term work visas.

Since that time, the OPT program has grown into the largest recruitment program for new high-skilled workers in the country, bringing 200,000 of them into the labor force each year. This report looks at the skill levels and human capital of OPT participants, finding they are highly educated and work increasingly in Science, Technology, Engineering, and Mathematics (STEM) fields.

This report also investigates the economic effects of the OPT program using geographic variation, as well as the promulgation of a rule that offered a 24-month extension to OPT participants with STEM degrees as a natural experiment. The report finds higher levels of OPT participants in a region lead to increased innovation in that region, as measured by the number of patents, higher average earnings among the college educated. In addition, it finds no evidence of adverse effects on average earnings, unemployment, or labor force participation.

The report closes with some policy recommendations to better retain OPT participants, including a new exemption for OPT participants from the H-1B numerical limitations.