Economics, Free Enterprise

The economic free lunch of high-skill immigration

Having lots of smart, entrepreneurial people in your country is a pretty good way to promote an innovative, growing economy. And if someone with those qualities wants to come to your country, you should make it as easy as possible for he or she to come. And if someone like that is already in your country, make it as easy and tempting as possible to stay. This piece in Bloomberg Businessweek makes the case:

Increasing bodies of evidence show that skilled immigrants are fueling technological innovation and job growth in America. A study released last week by Stuart Anderson of the National Foundation for American Policy found that immigrants were on the founding leadership teams of 24 of the top 50 privately held, venture-backed companies in the U.S. The highest percentage of these immigrant founders came from India. What’s more, Anderson found that in 76 percent of these companies, immigrants held key positions in engineering, technology, or management.

In another study released in December 2011, Madeleine Zavodny, an economics professor at Agnes Scott College, found that foreign-born adults with advanced science, technology, engineering, and math (STEM) degrees were strong net generators of jobs for native-born American workers. Zavodny found that 100 foreign-born workers with advanced STEM degrees generated 262 jobs for native-born workers, on average.

The study, sponsored by the American Enterprise Institute and the Partnership for a New American Economy, echoes earlier research by Professor AnnaLee Saxenian of the University of California, Berkeley, that showed that Chinese and Indian engineers managed 24 percent of the technology businesses started in Silicon Valley from 1980 to 1998. My own research found that in a quarter of the U.S. engineering and technology companies founded from 1995 to 2005, the chief executive or lead technologist was foreign-born. In Silicon Valley, the percentage of immigrant-founded startups was much higher—52 percent.

Indeed, AEI’s co-sponsored study makes three policy proposals:

1.  Giving priority to workers who earn advanced degrees from U.S. universities, especially those who work in STEM fields.

2.  Increasing the number of green cards (permanent visas) for highly educated workers.

3. Making available more temporary visas for both skilled and less-skilled workers.

The study’s conclusion:

America is currently mired in a period of the slowest economic growth seen in several generations, with persistently high unemployment, anemic job growth, and little bipartisan agreement on how to address these pressing problems. Action is required if America is to get back to work. Immigration policy can, and should, be a significant component of America’s economic recovery. Targeted changes to immigration policy geared toward admitting more highly educated immigrants and more temporary workers for specific sectors of the economy would help generate the growth, economic opportunity, and new jobs that America needs.

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