In a recent
blog post, Peter commented on both presidential candidates’ flawed immigration
policies, showing the economic benefits of increasing visa provision. His post
analyzes the wage and employment effects of immigration, but another dimension
that shows immigration’s benefits is high-skilled immigrants and their
entrepreneurial economic contributions. This is another important benefit of
freer legal immigration that should be talked about more.
The
Kauffman Foundation on Entrepreneurship recently released a report
detailing immigrants’ entrepreneurial contributions over recent years. The
report shows that although the growth rate of immigrant-founded companies has
stagnated over the past few years, immigrants represent a very significant
innovative force in the economy.
Some of the
figures presented in the report are very impressive. For example, 43.9 percent
of new Silicon Valley companies founded between 2006 and 2012 had “at least one
key founder who was foreign-born.” Further, across the United States, companies
with foreign-born founders “employed roughly 560,000 workers and generated $63
billion in sales in 2012.” The Kauffman report goes on to list many more
striking economic contributions of foreign-born entrepreneurs.
It is
important to keep in mind that immigration induces complex effects on the economy.
Often, protectionist sentiments can portray immigrants as solely job takers. As this study
shows, however, high-skilled immigrants can contribute to the development of new jobs
and the employment of American men and women.
Interesting response to Peter's article (http://parteepol381.blogspot.com/2012/10/presidential-candidates-immigration.html); the same thought popped in my head as well.
ReplyDeleteThere have been many articles in the Economist, the New Yorker, and various other publications about a perceived lack of these highly-skilled immigrants or "foreign-born entrepreneurs."
To take your point that there are many foreign-born highly-skilled workers here in the U.S. adding value to our economy, why then are we not trying to attract more?
Of course there are, as you say, "complex effects on the economy," but what about the political and social effects?
I know you have studied labor history in the U.S., so perhaps you can shed some insight on why there may be a resistance to having more immigrant workers, other than the reasons already stated by Peter (possibility of job losses for Americans and lower wages).
Also, maybe Freddy could add some of his insight to the difficulties of being hired/immigrating as a foreign born worker. They are more expensive due to visas and other tax incentives, but I am not fully versed on these issues.
Articles: Economist: (http://www.economist.com/node/21559642) New Yorker: (http://www.newyorker.com/talk/financial/2012/08/27/120827ta_talk_surowiecki)
Older Economist: (http://www.economist.com/node/13234953).
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ReplyDeleteThat’s an interesting question – why are we not trying to attract more of these high-skilled workers? In my opinion, the answer might once again be simple politics. Although encouraging the entrance of more high-skilled workers might make economic sense on a large scale, some professionals will see wage reductions as a result of immigrant competition. These individuals are likely to support visa restrictions in a variety of forms. With sufficient political power, professional organizations are able to limit potential competition from high-skilled immigrants.
ReplyDeleteIn his book, The Great Divergence, which assesses the state of income inequality in the United States, journalist Timothy Noah actually addresses that question. For him, the answer is that high-skilled positions in the United States are better protected than low-skilled positions. In other words, doctors, lawyers, and other professionals are more effective at pressuring Washington to restrict potential immigrant competitors than are factory workers. According to Noah, American doctors successfully lobbied Congress in 1997 to restrict the number of foreign physicians immigrating to the United States on the basis that these immigrants would reduce their wages.
The answer that Noah provides is not conclusive, and professional organizations’ alleged protectionist aims might be somewhat exaggerated; however, Noah understands that global competition is now affecting a broader spectrum of the population, including professionals (from Blinder). The wages that these professionals currently enjoy can also be threatened by increases in labor supply. As a result, the American Medical Association, for example, has an interest in limiting the number of doctors entering the United States.
Many trade-specific organizations do attempt to quietly restrict immigrant competition as a matter of politics. When one group is more successful in this regard, the rest of the country pays the consequences. For example, Noah argues that factory workers who are replaced by cheaper labor then have to pay artificially high healthcare bills – the result of stifling of competition in that profession.
These political and inconsistent pressures counteract one another, once again muddying the water in the immigration debate. Of course, many high-skilled immigrants do enter the United States each year and these immigrants make significant economic contributions; however, some argue that these contributions could be even greater than the entrepreneurial effect I first mentioned, as immigrants compete for professional positions in the United States.