The Role of Immigrants and Foreign Students in Science, Innovation, and Entrepreneurship

A conference on "The Role of Immigrants and Foreign Students in Science, Innovation, and Entrepreneurship" took place in Cambridge on January 26. Research Associate Richard B. Freeman of Harvard University, Ina Ganguli of University of Massachusetts Amherst, Shulamit Kahn of Boston University, Research Associate William R. Kerr of Harvard University, and Research Associate Megan MacGarvie of Boston University organized the meeting, which was sponsored by the National Science Foundation Science of Science and Innovation Policy Program and the Ewing Marion Kauffman Foundation. These researchers' papers were presented and discussed:

J. David Brown, Bureau of the Census, and John S. Earle, Mee Jung Kim, and Kyung-Min Lee, George Mason University

Immigrant Entrepreneurs, Job Creation, and Innovation

Anna Maria Mayda, Georgetown University; Francesc Ortega, Queens College and Graduate Center CUNY; Giovanni Peri, University of California at Davis and NBER; Chad Sparber, Colgate University; and Kevin Y. Shih, Rensselaer Polytechnic Institute

The Effect of H-1B Visas on Firms: Evidence from Publicly Traded Firms

The H1-B visa program is the main channel to hire skilled foreign workers in the U.S. There is an annual cap on the number of new H-1B visas awarded to for-profit firms. The goal of Mayda, Ortega, Peri, Sparber, and Shih's paper is to estimate the effects of H-1B visas on the performance of the firms that receive them. To carry out the analysis the researchers have obtained case-level data from the USCIS on the universe of H-1B visas awarded over the period 2000-2012 and merged them with data for all publicly traded companies in the United States. The resulting dataset is a panel of firms including information on sales, employment and profits, along with estimates of the stock of H1-B workers in the firm at each point in time. To address endogeneity bias the researchers adopt an instrumental-variables approach based on changes in the annual cap interacted by the degree of dependence of each firm on H-1B visas (as in Kerr and Lincoln, 2010). The researchers' preliminary findings suggest that within-firm increases in H1-B employment lead to growth in firm size (measured by employment and sales) and in profitability.

Michael Roach, Cornell University; Henry Sauermann, European School of Management and Technology and NBER; and John Skrentny, University of California at San Diego

U.S. Immigration Policies and the STEM Entrepreneurial Workforce

Large technology firms and startups are often credited with driving innovation and job growth, and there are heated debates about whether policy reforms are needed to attract and retain high-skilled immigrant workers. Using a novel survey that follows a cohort of 2,203 science & engineering doctorates from U.S. research universities, Roach, Sauermann and Skrentny examine the sorting of immigrant STEM workers into employment in startups or established firms. They report three key findings: First, prior to graduation foreign-born students are significantly more likely to be interested in working in a startup than U.S. citizens. After graduation, however, immigrant doctorates are significantly less likely to work in a startup over an established firm, even controlling for ability, degree field, and other individual characteristics. Moreover, the researchers find evidence that natives sort into startups or established firms based on their ex ante career preferences, while immigrants do not, suggesting that immigrants face constraints in preference-based sorting. Second, there is no significant difference in the wages of immigrant and native STEM doctorates in a given type of firm, although startup employees make significantly less than established firm employees. Finally, the researchers find differences in visa types between startup and established firm immigrant STEM workers, with H-1B being the most prevalent type among established firm employees. "Self-sponsored" visas such as OPT or spousal green cards are more common among startup employees, perhaps because these immigrants don't require an employer-sponsored visa to work in a startup. Overall, these findings suggest an untapped pool of immigrant doctorates who are interested in startup employment but instead work in large established firms. The findings have implications for current debates on immigration reform and for efforts to strengthen the human capital base of entrepreneurial ventures.

Ina Ganguli, University of Massachusetts Amherst, and Patrick Gaule, CERGE-EI

Will the U.S. Keep the Best and the Brightest (as Post-docs)? Career and Location Preferences of Foreign STEM PhDs

In this paper, Ganguli and Gaule discuss findings from a recent novel survey of current doctoral students in a major STEM field – Chemistry – conducted in 2017 at 50 U.S. institutions about their career and location preferences. First, the researchers estimate the career preferences of foreign and U.S. STEM Ph.D. students for different types of post-graduation jobs – postdocs, industry, or teaching positions – using both hypothetical choice methods and more standard Likert measures of preferences for different careers. Second, they examine students' location preferences using based on a hypothetical choice method. The researchers proceed to use these counterfactual job questions to construct a revealed-preferences ranking of universities as locations to do a chemistry postdoc. Ganguli and Gaule's findings show the foreign and U.S. Chemistry Ph.D. students have significantly different preferences for careers, with foreign students being much more likely to prefer doing a postdoc. Foreign students also value a U.S. location more than U.S. students, and their revealed preference ranking of locations for a postdoc differ in many ways. The researchers' results suggest the U.S. will manage to retain talented foreign graduate students and no brain exodus is in sight.

Stefano Breschi, University Bocconi; Francesco Lissoni, GREThA - Université de Bordeaux; and Ernest Miguelez, Université de Bordeaux

Returnee Migrants' Self-selection: Evidence For Indian Inventors In The US

Kirk B. Doran and Chungeun Yoon, University of Notre Dame

How Reducing Immigration Affects Innovation: Evidence from the Closing of America's Borders to Southern and Eastern Europe

Gaurav Khanna and Munseob Lee, University of California at San Diego

High-Skilled Immigration and Consumer Welfare

Economists and policy-makers have long debated the impacts of immigration on the wages of domestic workers. But despite the important theoretical implications of how immigrants may affect consumers in destination countries, there is little empirical evidence about the effects on consumer welfare. In this paper, Khanna and Lee study how high-skill migration to the United States under the H-1B visa program affected consumer welfare via changes in prices and the varieties of products produced by firms. This new evidence will help quantify the overall benefits from immigration, and inform policy on high-skill migration. The researchers combine the Nielsen data with the universe of H-1B visas granted between 2006 and 2016, which includes both new visas and renewals, and find that firms that hired more H-1B workers produced more products and lowered the prices of the products produced. This will potentially increase the welfare of consumers that now have access to more and cheaper products.

Sari Pekkala Kerr, Wellesley College, and William R. Kerr, Harvard University and NBER

High-Skilled Immigrant Networking and Innovation

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