That is among the findings of a new paper by Stephen Machin, professor of economics at University College London, and Richard Murphy, assistant professor of economics at the University of Texas at Austin, which analyses correlations between the increases in the numbers of British-born and overseas students in UK higher education institutions.

Asking whether the rapid influx of international recruits had led to ¡°crowding out¡± or ¡°crowding in¡± of home-grown talent, the researchers found no significant relationship between the changes in the numbers of domestic and non-European Union undergraduates between 2001-02 and 2011-12.

They say this is probably explained by limits on the number of undergraduates British universities were allowed to recruit during this period.

But they did find a positive relationship when they looked at taught and research postgraduates through a sample of 144 institutions.

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¡°For each additional overseas student attending a university, we see approximately one additional domestic student,¡± the researchers write. ¡°This is evidence indicating that universities use the additional fees from international students to subsidise postgraduate places.¡±

The correlation was particularly strong in Russell Group universities, which attract large numbers of international scholars.

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The number of non-EU students studying full-time in the UK has quadrupled to 266,000 over the last 20 years, with their presence in the postgraduate sector multiplying more than five times over the same period. They now make up 48 per cent of all students on master¡¯s programmes.

More significantly, the paper says, fees from overseas students at all levels now amount to well over a tenth of the higher education sector¡¯s entire income. They represent 39 per cent of all fee revenue, despite only accounting for 15 per cent of places.

The researchers tested their findings by examining the impact of the massive expansion in the number of Chinese students taking business and management subjects after their government relaxed visa rules in 1999.

Again, the number of domestic undergraduate students on such courses was unaffected between 1994-95 and 2011-12, but the number of postgraduates was positively affected.

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The full research is detailed in a discussion paper from the Centre for Economic Performance at the London School of Economics, and is summarised in article published today in CentrePiece, the centre¡¯s quarterly magazine.

chris.havergal@tesglobal.com