High Skilled Migration to the United States and its Economic consequences

 High-skilled immigrants (HSIs) play a crucial and growing role in the U.S. economy, particularly within the scientific and technological landscape, generating complex economic consequences related to innovation, aggregate growth, and the distribution of earnings.

The study of high-skilled migration to the U.S. requires an integrated approach, drawing on insights from macroeconomics, labor economics, industrial organization, and international trade, moving beyond static, partial-equilibrium contexts often used in immigration research.

I. Role of High-Skilled Immigrants in Innovation and the Workforce

Rising Presence and STEM Focus: HSIs represent an increasing proportion of the U.S. workforce, particularly in science and engineering. The share of foreign-born workers in Science, Technology, Engineering, and Mathematics (STEM) occupations expanded significantly, rising from 6.6% in 1960 to 28.1% in 2012.

HSIs are fundamental to the U.S. innovation ecosystem:

• They raise the quality and quantity of basic science performed in U.S. universities.
• They contribute to the creation of new ideas, designs, and patents that are commercialized by U.S. industries.
• Because HSIs are drawn to STEM fields, they are considered likely inputs into U.S. innovation. Foreign-born professionals have become a vital part of the U.S. R&D labor force.
• Among workers with advanced degrees in STEM, the foreign-born presence is particularly high: they accounted for 54.5% of STEM employment among PhDs and 40.7% among master's degree holders in 2013. Since the mid-2000s, immigrants have constituted the majority of U.S. workers in STEM with doctoral degrees.
• In computer-related fields, such as software development and programming, the foreign born make up the majority of U.S. workers in STEM jobs with a master's degree or higher.

Comparative Advantage and Entry: Highly educated immigrant workers exhibit a strong revealed comparative advantage in STEM occupations. This specialization is significantly stronger in computer-related occupations than in STEM fields generally.

While HSI patenting rates are higher than those of natives, this differential disappears when controlling for major field of study, suggesting their comparative advantage is linked to their proclivity for studying STEM disciplines in university. U.S. universities serve as a pipeline, attracting foreign students, training them in STEM, and integrating them into the U.S. labor force. The pattern of HSIs arriving in the U.S. at age 21 or older is consistent with the H-1B visa acting as an important channel for entry into the STEM labor market.

II. Economic Consequences of High-Skilled Migration

High-skilled immigration introduces economic dynamics that are distinct from those of low-skilled immigration and are arguably more consequential due to the potential link between immigrants and productivity-enhancing innovation.

1. Aggregate Economic Growth and Productivity

The flow of high-skilled workers between countries is considered a first-order determinant of the pace of global economic growth.

• Positive Role in Growth: Research presented in the sources consistently finds a positive role for immigration in generating aggregate economic growth.
• Productivity and Innovation: U.S. states and localities that attract more high-skilled foreign labor see faster rates of growth in labor productivity. Studies have also linked the temporary expansion of the H-1B program (1999-2003) to increases in patenting, particularly among Chinese and Indian inventors.
• Income and Output: One study found that between 1994 and 2001, high-skilled foreign workers increased the overall income of U.S. native-born workers, while also raising output and lowering prices in the information technology (IT) sector.

2. Wages and Distributional Effects

High-skilled immigration affects the distribution of income and employment. Studies examining market adjustment account for multiple factors, including firm dynamics, worker educational choices, and business selection over product mix, which together determine productivity growth.

• Inequality: Despite generating overall growth, high-skilled immigration has substantial distributional consequences. However, dynamic models suggest that high-skilled immigration—especially in the presence of endogenous growth—tends to attenuate increases in skill-based inequality by placing downward pressure on the wage gap between high- and low-skilled workers.
• Impact on Native Workers: In the short run, one model suggests that the introduction of high-skilled immigration reduces the wage premium of high- to low-skilled workers. Historically, there were substantial distributional consequences: U.S.-born workers shifted out of computer science as wages in that occupation fell relative to the expected outcome absent immigration, although owners of factors of production that complement computer scientists saw increased wages.

3. Native vs. Immigrant Earnings

The perception that foreign-born workers accept lower wages, thereby depressing earnings in STEM, is a central concern in policy debates.

• Wage Parity in STEM: While foreign-born workers earn substantially less than native-born workers in non-STEM occupations, the native-foreign born earnings difference is much smaller in STEM jobs.
• Assimilation: Foreign-born workers in STEM fields achieve earnings parity with natives in less than a decade, contrasting sharply with non-STEM jobs where parity may require 20 years or more. Immigrant STEM workers with six or more years in the U.S. often begin earning more than their native-born counterparts. This lack of a persistent wage discount for HSIs in STEM occupations challenges the claims of critics of the H-1B program.

III. Migration Mechanisms and Market Adjustment

The full impact of HS immigration depends on the state of technology, market structure, and policies that impact the flows of labor, goods, and capital.

Policy and Firm Structure: Visa policies, such as the H-1B program and L visas, influence the temporary and permanent flow of workers. Multinational enterprises (MNEs) have an advantage in accessing the global talent pool by utilizing the relatively unconstrained L visas, while other firms rely on the oversubscribed H-1B program. One theoretical implication is that greater access to foreign workers via high-skilled visas can actually increase firm-level demand for native-born high-skilled workers.

Alternatives to Physical Migration: Globalization does not rely solely on the physical migration of labor. Digital markets and contests increasingly serve as an alternative platform for employers to identify and utilize skills from abroad, indicating that employers' access to the global talent pool is not solely dependent on physical migration. Intriguingly, these online employment exchanges appear to complement immigration, not substitute for it.

Adjustment Dynamics: The dynamics of adjustment affect the ability to predict how policy changes will impact economic growth and earnings distribution. In dynamic models, immigration encourages firm entry in the short run, which generates increased capital investment, resulting in a near-term drop in consumption until the economy reaches a new stationary equilibrium characterized by higher income and consumption levels.

However, despite abundant evidence of overall gains from high-skilled immigration and associated innovation, many questions remain regarding distributional consequences and the precise impact of immigration policies, due partly to limited data distinguishing entry channels (e.g., family-based, student, H-1B, or employer-sponsored visas).