Economic Impact of International Education in Canada – 2016 Update

Table of Contents

3. Data Sources and Methodology

RKA’s methodology for the study on the economic impact of international education in Canada includes extensive secondary research involving literature review, collecting existing statistical data and information, as well as consulting with provincial and territorial education sector representatives, and representatives from organizations promoting and researching trends in international education in Canada and/or provinces.

In this section, we will describe the different sources of data that are available, the ones we use for the project, and any limitation with the data sets. We will also point out the differences in data sources and methodology between our estimates and those adopted by Statistics Canada in its estimate of Canada's trade in international education services.

Data Sources

Enrollment

One of the main purposes of this study is to determine the overall economic impacts of international education which requires the understanding of the number of international students in each province and territory and in different levels of study – public or private, in the K-12 system, at the college level as well as under-graduate and graduate students in the university system. It is also necessary to determine the number of international students studying in professional and language training programs.

We have not found one complete set of data that fits our definition of international students or reported data on all students. Statistics Canada, in its Post-Secondary Information System, collects data on international student enrollment at the college and university levels (including breakdown of undergraduate and graduate levels) by field of study or by program level. However, the colleges and universities that are covered in the Statistics Canada survey are essentially all in the public system and thus data does not yield information on those international students in the private post-secondary system.

On the number of international students in the K-12 system, no data is readily available from Statistics Canada for each of the provinces and territories, or from each provincial or territorial ministry of education.

As described in the Introduction section, where no consistent data is available for international students, the alternative is to use data on foreign students available from Immigration, Refugees and Citizenship Canada (IRCC). As international students need to obtain a study permit before arriving in Canada to pursue education and training for a period longer than six months, IRCC’s data allows us to know how many holders of study permits are in each of the provinces and territories at a given time.

IRCC defines foreign students as:

“Temporary residents who entered Canada mainly to study and have been issued a study permit (with or without other types of permits). A study permit is an official document issued by an officer that allows someone who is not a Canadian citizen or a permanent resident to study in Canada. In general, a study permit is not needed for any program of study that is six months or less. For statistical purposes, a temporary resident is designated as a foreign student on the basis of IRCC’s determination of his or her “yearly status” – the main reason for which the person has been authorized to enter and stay temporarily in Canada during the year of observation. Foreign students exclude temporary residents who have been issued a study permit but who entered Canada mainly for reasons other than study.”

Five levels of study are shown for foreign students.

  1. Secondary or less: includes equivalent of High school/Secondary, elementary – grade, CEGEP.
  2. Post-Secondary: which is further divided into
    • College Education
    • University Education
    • Unspecified Post-Secondary - the level of study in this case was not mentioned
  3. Quebec Programs: this includes PTC/TCST/DVS/AVS (Pre-work Training Certificates/Training Certificate for a Semi-skilled Trade/Diploma of Vocational Studies/Attestation of Vocational Specialization.
  4. Residents and Interns: unique to medical profession.
  5. Other Studies: these set of data could not be defined based on the available data. Other Studies, amongst other levels, could include the spouses and children of international students should they also hold a study permit themselves.

The IRCC data therefore allows us to use the number of study permit holders as a proxy for the number of international students at a given time in a year.  It also allows for distinction between broad levels of study. For all these reasons, we have relied upon IRCC’s data for analytical purposes.

One limitation of using the IRCC’s data set to represent the number of international students is that the actual number of permit holders registering in a Canadian institution may be smaller than the number of permits issued, due to the fact that some permit holders may not be able to, or have chosen not to, enroll in an education program. Another limitation of this data set is that since the term “foreign students” is defined by citizenship, it also includes permit holders who are children or spouses of attending students, but these are not considered fee-paying international students for the purposes of our analysis. [18]

Finally, another important source of international students that is not fully covered in the IRCC data is the number of such students who study in Canada for periods shorter than six months, as they do not require a study permit to enter the country. We have approached organizations whose members are in the business of providing short-term vocational training to the public. It is noted, however, that only Languages Canada collects comprehensive data that is useful for our purposes.

Languages Canada is Canada’s premier language organization representing its two official languages, English and French. Membership is limited to schools which meet the rigorous standards of the association and who are committed to upholding them. Currently there are over 165 member programs across the country, including universities, colleges, and private institutions. The association is not-for-profit and sector driven. Quality assurance is a critical element of Languages Canada and all member schools are required to be accredited under one internationally recognized and comprehensive scheme.

In the rest of the report, we define international students as those from these two sets of data available to us, with adjustments. Long-term students refer to the ones that are represented by the IRCC data, while short-term students refer to the ones that are students pursuing language training programs of shorter than six-month duration in institutions with Languages Canada membership.

Detailed adjustments to the IRCC data and the data from Languages Canada are presented in Appendix 1.

Student Expenditure

For students in each level of study, we have estimated expenditure in the following categories:

  • Tuition and fees,
  • Additional compulsory fees,
  • Books and other study tools/materials
  • Living expense,
  • Cost of transportation,
  • Discretionary expenditure

In order to calculate net economic benefits brought by international students in the host country, we have taken into account any financial assistance to international students from the Canadian governments as well as universities or other institutions.

Again, the detailed description of adjustments can be found in Appendix 1.

Additional Visiting Family and Friends “Tourist” Activities

Existing literature on international education points to another area of university activity, which concerns the important role that institutions can play in attracting visitors to the host country. [19]

In this study, we estimate the number of family and friends of international students visiting Canada based on assumptions used in the 2013 Australian ACPET study on economic benefits of international students brought to the country.

Analytical Framework

To capture the overall impact of international educational services on the Canadian economy, expenditures of international students and their visiting family and friends are applied to the Statistics Canada inter-provincial impact simulation model. [20] The model provides estimates of the overall impact on output, Gross Domestic Products (GDP), and employment in each provincial /territorial economy.

A short description of the input-output model is provided here.

An Input-Output Structure of the Economy

When a person spends on a product (goods and/or services), that amount of expense creates a direct requirement for the production of that product. The economic impact, however, does not end there. The increased production of this product leads to increased production of all the intermediate goods and services that are used to make this product, and the increased production of intermediate goods and services will in turn generate more demand for other goods and services that are used to produce these intermediate products.  As demand rises, workers are able to earn a higher wage, and they sometimes decide to spend a portion of their extra earnings to purchase more goods and services.

As such, an initial demand for a product creates a chain effect down the production process.

An economic impact analysis is designed to study such inter-linkage between industries in order to evaluate how a change in an initial demand for goods or services contributes to changes in other industries’ levels of production and overall economic activity level within a region.

The input-output model is based on the input-output structure of the Canadian economy [21], which is essentially a set of tables describing the flows of goods and services amongst the various sectors of the economy. Such a model is useful in determining how much additional production is generated by a change in the demand for one or more products or by a change in the output of an industry.

Beyond the direct expenditures, input-output models can be utilized to analyze additional benefits to the economy. This includes businesses providing goods and services to entities where direct expenditures occur. In addition, as a result of increased local household income, there may be further increases in overall expenditure. The latter is considered as a spun-off (or induced) impact, which is sometimes shown in economic impact studies.

Currently, Statistics Canada uses the 2010 inter-provincial input-output model to estimate the economic impact, and the results are used for comparative analysis purposes. It should be noted that employment impact estimates from this model are based on the 2010 total compensation per job. [22] As such, it was necessary to deflate the net student expenditures incurred in 2014 to 2010 dollars to get a more accurate estimate of the employment impact.

[18] It should be noted that there are still some “non-fee-paying” students who have not been adjusted for fully due to lack of data.  For example, no adjustments have been made for cases where an agreement Quebec has made with respect to international students with French citizenship (in Quebec, an international student can even pay domestic fee if he/she is studying French language, literature, culture etc. at the degree level), or with respect to exchange students in all provinces (they don’t pay international fees as they pay tuition to their own institution back home).

[19] Some studies include not only leisure visitors such as the family and friends of international students visiting the host country but also international conference business and international academic business visitors.

[20] Statistics Canada catalogue product 15F0009X – Input-Output Model Simulations (Interprovincial Model).

[21] Statistics Canada catalogue product 15F0042X – Provincial Input-Output Tables.

[22] Data is derived from Statistics Canada CANSIM table 383-0030 – labour statistics by business sector industry and by non-commercial activities consistent with the industry accounts, provinces and territories.