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How can economists measure the benefits of high-skilled immigration? The challenge is to use real-world data to separate this immigration from other factors, recognizing that some anecdotes about particular high-skill immigrants doesn’t offer real evidence, and that corellation is not causation. Economists often tackle questions like this by looking for a “natural experiment”–that is, some kind of event or policy that created a shock of more (or less) high-skill immigration. Michael A. Clemons describes some of this evidence in his useful short essay, “New US curb on high-skill immigrant workers ignores evidence of its likely harms” (Peterson Institute for International Economics,” September 22, 2025).
For example, consider the H-1B visa, which allows a US employer to hire a foreign professional–defined as someone who has a least a bachelor’s degree in a “specialty occupation” that typically involves advanced technology. The visa is typically for three years, extendable to six years. In 1998, Congress tripled the number of these H-1B visas. Then in 2004, Congress cut the number by more than half. Set aside for the moment the issue of whether these policy choices made sense, and just look at it as a research opportunity.
When Congress tripled and then halved the number of H-1B visas, the effects were not evenly distributed across US cities. Some cities saw much bigger increases and declines in H-1B visa-holders than others. Thus, one can compare urban areas that were similar in these techology industries before 1998, and then see what happened when some of these cities received an influx of talent while others did not.
In addition, more companies would like to hire through the H-1B visa program than the number of actual visas available, so the visas are actually allocated across firms by lottery. Again, think of this as a research opportunity. A researcher can compare those companies that by random chance won the lottery and were allowed to hire additional skilled labor to those companies that were not.
In short, the results of such studies are not theoretical claims, but instead are real-world results based on fairly recent US experience. Clemons describes what the studies show:
That’s how we know that workers on H-1B visas cause dynamism and opportunity for natives. They cause more patenting of new inventions, ideas that create new products and even new industries. They cause entrepreneurs to found more (and more successful) high-growth startup firms. The resulting productivity growth causes more higher-paying jobs for native workers, both with and without a college education, across all sectors. American firms able to hire more H-1B workers grow more, generating far more jobs inside and outside the firm than the foreign workers take.
An important, rigorous new study found the firms that win a government lottery allowing them to hire H-1B workers produce 27 percent more than otherwise-identical firms that don’t win, employing more immigrants but no fewer US natives—thus expanding the economy outside their own walls. So, when an influx of H-1B workers raised a US city’s share of foreign tech workers by 1 percentage point during 1990–2010, that caused 7 percent to 8 percent higher wages for college-educated workers and 3 percent to 4 percent higher wages for workers without any college education.
The key point is that in high-tech growth industries, the number and size of firms and the number of jobs is not static. An increase in the number of high-skilled immigrant workers raises the number of jobs and wages for native-born workers across a range of skill levels. Openness to innovators and innovation is a key driver for a rising US standard of living.
I’ll just add that the H-1B visa program is undoubtedly imperfect, like most real-world policies. The receiver of the visa is effectively tied to the employer for a period of time, which creates a potential for abuse. There are sure to be some native-born high-skill workers who look at the influx of immigrant high-skilled workers and worry that it will negatively affect their job prospects or wages. Economic growth is disruptive. Economic stagnation will often appear less disruptive–until people all over the economy recognize that in a zero-growth or low-growth economy, the only way to get ahead is for someone else to have less. As Paul Romer has said: “Everyone wants progress. Nobody wants change.“
Hat tip: I was directed to the Clemons article by Tyler Cowen in a post at the ever-useful “Marginal Revolution” website.
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