Friday, March 5, 2010

Economics 05/03/2010: Can immigration help our Smart Economy?

Does targeted immigration policy (focusing on skills and capability) deliver the results for research, science and engineering? This question is important to Ireland, since
  • we have ambitious objectives in driving up R&D and science activity; and
  • we do not have a meritocratic immigration policy here (aside from by-now virtually stifled 'green card' scheme, our immigration policy is geared toward almost exclusively on internal EU27 migration)
A new study published this month by NBER (here) evaluates the impact of high-skilled immigrants on US technology formation using H-1B visa admissions.

Higher H-1B visa admissions are shown to increase immigrant science and engineering employment and patenting by inventors of Indian and Chinese origin in cities and firms dependent upon the program when compared against cities and firms which do not avail of the visa.

There is only a limited effect on native science and engineering employment or patenting, ruling out displacement effects, with only small crowding-in effects. Total science & engineering employment and invention increases with higher admissions primarily through direct contributions of immigrants.

“A 10% growth in the H-1B population corresponded with a 1%-4% higher growth in Indian and Chinese invention for each standard deviation increase in city dependency”. Anglo-Saxon origin inventors continue to account for approximately 70% of all domestic patents. Crowding-in is small, with a 10% growth in the H-1B population corresponding to a 0.3%-0.7% increase in total invention for each standard deviation growth in the degree of city dependency on participation in the visa programme

Tests also confirm that these positive results “are not due to endogenous changes in national H-1B admissions following lobbying from very dependent groups

"Total patenting shares are highly correlated with city size, and the three largest shares of US domestic patenting for 1995-2004 are San Francisco (12%), New York City (7%), and Los Angeles (6%). Ethnic patenting is generally more concentrated, with shares for San Francisco, New York City, and Los Angeles being 22%, 10%, and 9%, respectively. Indian and Chinese inventions are even further agglomerated. San Francisco shows exceptional growth from an 8% share of total US Indian and Chinese patenting in 1975-1984 to 26% in 1995-2004, while New York City share declines from 17% to 10%."

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