Policy ForumMigration

Reservoir of foreign talent

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Science  19 May 2017:
Vol. 356, Issue 6339, pp. 697
DOI: 10.1126/science.aan2956

Understanding the impact that increased high-skilled immigration has had on a country's economy involves evaluating counter-factuals—what would the economy have been like under a more restrictive immigration policy? We modeled decisions made by U.S. firms and workers, then used the introduction of the Internet and the subsequent innovation boom to calibrate these models and evaluate counterfactuals (1, 2). Our work suggests that the influx of foreign-born computer scientists since the early 1990s—spurred by U.S. immigration policy that favors high-skilled workers and by increases in the availability of foreign talent, particularly from India—has had several economic impacts. It increased the size of the U.S. information technology (IT) sector but put downward pressure on wages of computer scientists and, as a result, discouraged some U.S.-born college graduates from becoming computer scientists. It increased firms' profits and benefited consumers via lower prices and more efficient products. Under our calibrated model, immigration, enabled by the H-1B visa program, raised overall worker incomes by 0.2 to 0.3% but decreased wages of U.S. computer scientists by 2.6 to 5.1% in 2001. Moreover, U.S. workers switched to other occupations, which lowered the number of domestic computer scientists by 6 to 11% in 2001 (2). The claim that U.S. employers cannot find enough adequately skilled computer scientists within the United States appears to be an overstatement. When demand for computer scientists expanded in the past, it was met by an increase in college students majoring in computer science and an increase in employers hiring workers trained in other science, technology, engineering, and mathematics fields (1, 2). However, the ability to draw from a pool of skilled foreigners facilitated growth in the U.S. science and technology sector. The reservoir of foreign talent may have acted as a buffer in the IT sector, smoothing demand adjustments in the U.S. labor market and muting wage increases during the IT boom in the 1990s. In contrast, wages rose rapidly during the booms in the 1970s and early 1980s, when this large stock of foreign talent was less readily available (3). Any assessment of the overall impact of skilled immigration would also have to consider the effect it will have on the position of the United States in the world economy.

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