Friday, March 20, 2009

Immigration and jobs

Despite the common concern that immigrants to the U.S. take jobs that would otherwise go to American citizens, immigrants actually create jobs and promote innovation. Two recent articles in The Economist look at this topic. In the March 7, 2009 issue, a study by Harvard economist William Kerr and University of Michigan economist William Lincoln looked at how patent production changes in response to changes in the number of H-1B visa holders, immigrants with technical skills. When the number of H-1B visas was increased by 10%, total patenting increased by 2%, caused mostly by patent activity by immigrants. However, rather than reducing the number of patents by the native population, those also increased.

In the March 14, 2009 issue's special report on entrepreneurship, it's noted that H-1B visas are capped at 85,000/year, and a maximum of 10,000 from any one country, increasing the wait for large countries such as India and China, where the wait time is about six years. There are over one million people waiting. This issue also notes that about half of Silicon Valley's startups are founded by immigrants, and about 25% of all U.S. science and technology startups have a CEO or CTO who is an immigrant, and these companies employ 450,000 people and generate $52 billion in annual revenue. A quarter of U.S. patent applications in 2006 name foreign nationals as inventors or co-inventors.

3 comments:

jackd said...

The article, and presumably the underlying research, does support the idea that immigration positively correlates with innovation. But it does not address the question of whether the H-1B program is being used primarily to fill positions for which there's a shortage of US talent (as intended) or if employers are gaming the system to hold down salaries and get employees they have additional leverage over.

A quick Google search turned up http://www.uscis.gov/files/article/FY03H1BFnlCharRprt.pdf. It shows that only about only 20% of H-1B's were granted to holders of professional or doctoral degrees, the ones I would expect produce most of the patent activity that Kerr and Lincoln studied was generated by PhD's. That leaves over 170,000 visa holders with Master's degrees or less.

So, H-1B immigrants promote innovation? I'll buy that, at least if we're talking about research scientists. But that's a long way from establishing that it's beneficial to import system admins and DBAs because US citizens won't take the jobs at $50k/year.

Jim Lippard said...

"only about only 20% of H-1B's were granted to holders of professional or doctoral degrees, the ones I would expect produce most of the patent activity that Kerr and Lincoln studied was generated by PhD's."

Speaking as a patent co-inventor with an M.A., do you have any evidence for this assumption? My speculation is that named inventors and co-inventors on patents are far more likely to hold a Master's degree than a doctorate for the same reason that average salaries for those holding a master's degree are greater than those for Ph.D.s--the latter are more likely to be in academia than in business.

Einzige said...

jackd, your argument is flawed.

How is it not beneficial to increase the pool of available workers for a given position? More applicants translates to greater opportunity for the employer to find a more highly skilled and/or cheaper employee. This in turn leads to greater profitability and/or cheaper prices for the firm's customers.

If the hiring of an H-1B employee doesn't pencil then it doesn't happen.