High-Skilled Migration to the United States and Its Economic Consequences
edited by Gordon H. Hanson, William R. Kerr and Sarah Turner
University of Chicago Press, 2018
Cloth: 978-0-226-52552-5 | Electronic: 978-0-226-52566-2
DOI: 10.7208/chicago/9780226525662.001.0001
ABOUT THIS BOOKAUTHOR BIOGRAPHYTABLE OF CONTENTS

ABOUT THIS BOOK

Immigration policy is one of the most contentious public policy issues in the United States today.  High-skilled immigrants represent an increasing share of the U.S. workforce, particularly in science and engineering fields. These immigrants affect economic growth, patterns of trade, education choices, and the earnings of workers with different types of skills. The chapters in this volume go beyond the traditional question of how the inflow of foreign workers affects native employment and earnings to explore effects on innovation and productivity, wage inequality across skill groups, the behavior of multinational firms, firm-level dynamics of entry and exit, and the nature of comparative advantage across countries.

AUTHOR BIOGRAPHY

Gordon H. Hanson holds the Pacific Economic Cooperation Chair in International Economic Relations and is director of the Center on Global Transformation at the University of California, San Diego. William R. Kerr is the Dimitri V. D’Arbeloff-MBA Class of 1955 Professor of Business Administration at Harvard Business School. Sarah Turner is the University Professor of Economics and Education and Souder Family Professor at the University of Virginia. All three are research associates of the National Bureau of Economic Research.
 

TABLE OF CONTENTS


DOI: 10.7208/chicago/9780226525662.003.0000
[immigration;H-1B visa;L-1 visa;STEM;innovation;technical change;polarization;growth;outsourcing;United States]
High-skilled immigration cuts across the traditional boundaries of economic fields, impacting innovation and economic growth, patterns of trade, education choices, and the earnings of workers with different types of skills. The aim of the six chapters in this volume is to integrate ideas from international trade, macroeconomics, industrial organization, and labor economics in the study of high-skilled immigration in the United States. The chapters in this volume bring models of firms and individual behavior to questions about how the growth of high-skilled immigration affects the level and distribution of income, employment, and innovation. By applying a broad-based theoretical lens to the challenges and opportunities of high-skilled talent flows to the United States, the collection goes beyond the questions of how the inflow of foreign workers affects native employment and earnings. The chapters consider additional margins of adjustment to high-skilled immigration including the effects on innovation and productivity, the impact on overall inequality across skilled groups, the particular response of multinational enterprises, firm-level dynamics of entry and exit, and the nature of comparative advantage across countries, while also identifying new margins of adjustment including digital markets and contests which extend globalization without the physical migration of labor. (pages 1 - 6)
This chapter is available at:
    University of Chicago Press


DOI: 10.7208/chicago/9780226525662.003.0001
[high-skilled immigration;occupational comparative advantage;Roy model]
We examine the changing presence of foreign-born college-educated workers in the U.S. labor force and characterize their occupational specialization over time. Whereas their employment share rises from 4.2% in 1960 to 11.6% in 2010-12 in education, law, and social-service occupations, it jumps from 6.6% to 28.1% over this same period in science, technology, engineering, and mathematics (STEM). Across occupations, there are differences in employment patterns by immigrants according to country of origin. In STEM jobs, the share of U.S. workers from India rises from near zero in 1960 to 9.3% in 2010-12. In health-related occupations, the share of workers from Southeast Asia rose to 5.4% in 2010-12 from negligible levels five decades previously. We find occupational specialization patterns are similar for male and female immigrants from the same origin countries and these patterns persist over time. This suggests factors driving occupational specialization among immigrants are stable across decades and common to workers in different demographic groups from the same origin countries. Because these patterns are common to workers born and raised in a given origin country and born in that origin country but raised in the U.S., they do not appear to be explained by origin-country educational systems. (pages 7 - 40)
This chapter is available at:
    University of Chicago Press
    https://academic.oup.com/chica...


DOI: 10.7208/chicago/9780226525662.003.0002
[temporary skilled worker migration;multinational enterprises;L-1 and H-1B visa programs]
Cutting edge R&D requires highly differentiated skilled labor. The H-1B and L-1 visa programs exist in part to allow U.S. firms access to such skilled foreign labor but have been accused of hurting U.S. workers.This chapter provides an analysis of the role of these programs in encouraging U.S. R&D and in affecting opportunities for skilled U.S. citizens. We develop a model in which firms source differentiated labor globally. In their sourcing, multinational firms have an advantage relative to non-multinationals because they can procure foreign talent at low cost in the countries in which they own affiliates. This advantage results in higher R&D intensity of firms with greater multinational reach. We also show that if worker talent is sufficiently differentiated across countries, these programs increase the demand for U.S. skilled labor.Turning to firm-level data on visa usage, we show empirically that U.S. multinationals use skilled worker visas more intensively than non-multinationals and that the country pattern of this sourcing is highly correlated with the location of U.S. foreign affiliates abroad. Our results suggest that multinationals have an advantage relative to non-multinationals in sourcing foreign talent and that this contributes to their advantage in developing new technologies. (pages 41 - 70)
This chapter is available at:
    University of Chicago Press
    https://academic.oup.com/chica...


DOI: 10.7208/chicago/9780226525662.003.0003
[digitization;outsourcing;labor flows;immigration;diaspora;talent;networks]
Digital labor markets are rapidly expanding and connecting companies and contractors on a global basis. We review the environment in which these markets take root, the micro- and macro-level studies of their operations, their ongoing evolution and recent trends, and perspectives for undertaking research with micro-data from these labor platforms. We undertake new empirical analyses of Upwork data regarding 1) the alignment of micro- and macro-level approaches to disproportionate ethnic-connected exchanges on digital platforms, 2) gravity model analyses of global outsourcing contract flows and their determinants for digital labor markets, and 3) quantification of own- and cross-country elasticities for contract work by wage rate. Digital labor markets are an exciting frontier for global talent flows and growing rapidly in importance. (pages 71 - 108)
This chapter is available at:
    University of Chicago Press
    https://academic.oup.com/chica...


DOI: 10.7208/chicago/9780226525662.003.0004
[high-skill immigration;H-1Bs;information technology]
Over the 1990s, the share of foreigners entering the US high-skill workforce grew rapidly. This migration potentially had a significant effect on US workers, consumers and firms. To study these effects, we construct a general equilibrium model of the US economy and calibrate it using data from 1994 to 2001. Built into the model are positive effects high skilled immigrants have on innovation. Counterfactual simulations based on our model suggest that immigration increased the overall welfare of US natives, and raised workers’ incomes by 0.2% to 0.3%. High-skill immigration did, however, have significant distributional consequences. In the absence of immigration, wages for US computer scientists would have been 2.6% to 5.1% higher in 2001. US workers switch to other occupations, reducing the number of US born computer scientists by 6.1% to 10.8%. On the other hand, complements in production benefited substantially from immigration, and immigration also lowered prices and raised the output of IT goods by between 1.9% and 2.5%, thus benefiting consumers. Finally, firms in the IT sector earned substantially higher profits due to immigration. (pages 109 - 176)
This chapter is available at:
    University of Chicago Press
    https://academic.oup.com/chica...


DOI: 10.7208/chicago/9780226525662.003.0005
[immigration;STEM;directed technical change;job polarization]
Immigration has constituted an important source of growth in high-skilled employment, innovation, and productivity in the U.S. during the past 35 years. In this chapter, we study the role of this immigration in accounting for changes in the occupational-skill distribution and wage inequality experienced during this time period. We study the role of foreign-born workers in the growth of employment in STEM occupations since 1980. Given the importance of employment in these fields for research and innovation, we consider their role in a model featuring endogenous non-routine-biased technical change. We use this model to quantify the impact of high-skilled immigration, and the increasing tendency of such immigrants to work in innovation, on the pace of non-routine biased technical change, the polarization of employment opportunities, and the evolution of wage inequality since 1980. (pages 177 - 204)
This chapter is available at:
    University of Chicago Press
    https://academic.oup.com/chica...


DOI: 10.7208/chicago/9780226525662.003.0006
[immigration;firm dynamics;immigration policy;growth]
How does immigration affect relative wages, output, and welfare? How are the gains (or losses) from changes in immigration policy accrued over time? This chapter shows how the dynamics of the firm yield new insights into the short- and long-run economic outcomes from changes in immigration policy. I quantitatively illustrate these insights by evaluating two policies: an expansion of and the elimination of the H-1B visa program for skilled labor. A change in policy changes firms’ entry and exit decisions as they dynamically respond to changes in market size. The dynamic response of firms amplifies changes in relative wages as labor demand shifts with the distribution of firms. Firms’ responses also lead to the rapid accrual of aggregate gains/losses in output and consumption. The welfare implications of policy changes depend critically on who bears the burden of creating new firms. (pages 205 - 238)
This chapter is available at:
    University of Chicago Press
    https://academic.oup.com/chica...

Contributors

Author Index

Subject Index