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I use a randomized controlled trial to study how nonresident tuition affects where
highly skilled workers eventually live and work. For every $10,000 of tuition relief,
the university receives $1,903 from increased enrollment and loses $2,738 from reduced
tuition, yielding a small $835 loss. Treated students are more likely to stay in-state 12
years later and eventually earn $25,302 more in present value within the local economy,
showing that the university’s profit-maximizing tuition level is suboptimal from
the state’s perspective. The effects are driven by higher retention of inframarginal
students and by out-of-state US nationals rather than international students.
